Arm's length pricing for corporate guarantees and foreign-currency receivables applies a reduced commission, LIBOR benchmark, and credit period.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Transfer-pricing treatment of corporate guarantees to wholly owned associated enterprises is discussed as requiring an arm's length commission of 0.5%, rather than a bank-guarantee rate of 1.90%. For outstanding foreign-currency receivables from associated enterprises, the relevant benchmark is the market rate for the transaction currency, identified as LIBOR plus 200 basis points rather than domestic lending or deposit rates. A normal interest-free credit period of 60 days is to be allowed before computing interest. The resulting adjustments are confined to the guarantee commission and recomputation of receivables interest on those parameters.....