What is comparability analysis and what does it comprise of?
A comparability analysis refers to the comparison of a Controlled Transaction with a Comparable Uncontrolled Transaction(s). A Controlled Transaction and uncontrolled transactions are comparable if none of the differences between the transactions could materially affect the factor being examined in the methodology (for example price or margin), or if reasonably accurate adjustments can eliminate the material effects of any such differences.
A comparability analysis includes two key aspects:
Identifying the Related Parties, Connected Persons, commercial or financial relations between the Related Parties or Connected Persons, and the conditions and economically relevant circumstances attaching to those relations in order that the Controlled Transaction is accurately delineated
Comparing the conditions and the economically relevant circumstances of the Controlled Transaction as accurately delineated with the conditions and the economically relevant circumstances of Comparable Uncontrolled Transactions.