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On what basis should the appropriate base/benchmark be defined to compare net profit margins for the use of Transactional Net Margin Method?

​In the case of applying TNMM, it is required to identify a Profit Level Indicator (PLI) that can serve as an appropriate base/benchmark to compare the net profit margin of transactions with an uncontrolled comparable. PLIs are financial ratios that measure the link between profits and either cost incurred, revenue earned, resources employed, or any other appropriate base/benchmark. The application of a distinct PLI depends on several factors, including the nature of the activities of the tested party, the reliability of the available data and the extent to which the PLI is anticipated to produce a substantial measure of income.​​
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Last Update: 04 Sep 2020 06:06 PM Saudi Arabia Time