You must consider this in conjunction with the requirements set by the Tax Administration Regulation for the process. See also Document the information in your transfer pricing documentation.

Requirements for the process of finding comparable transactions

The comparison base is based on internal or external comparable transactions and the five comparability factors. You should explain:

• Any adjustments you have made to improve comparability
• The principles you have used when selecting comparable transactions

Regardless of the approach you use, the Tax Administration will assess how reliable the comparison base is. The most important aspects in this context are that the process for finding the comparability base is:

• Transparent: We see the criteria you have used for comparability and that you are open about what you have done in the process.
• Verifiable: We see the data you rely on and can verify it. You should document where you obtained the data and the search criteria you used to select the data.
• Systematic: We see the method you used to find comparables. You use criteria for selecting and possibly excluding comparable transactions in a consistent and coherent manner.
• Objective: We see that the comparison base remains consistent over time and is not based on a desire for a specific outcome.

Time period for the comparison base

When selecting comparable transactions, several issues are related to timing. The Norwegian Tax Administration places emphasis on the fact that you:

• establish the comparison base based on the time period in which the transaction occurs.
• determine the price based on information known at the time the transactions are conducted. This typically involves comparable transactions from previous years, and economic and market information known at the time of the transaction.
• test the price of controlled transactions against a comparison base found shortly after the transactions are conducted.

Special considerations when conducting database searches

You can find external comparable transactions in databases.

If you conduct database searches, it is important to comply with the requirements for transparency, verifiability, a systematic approach, and objectivity.

If you choose to present a comparability analysis based on database searches, be aware of the following:

• Databases rely on public information, and what constitutes public information may vary depending on the country (jurisdiction) where the company is located and the reporting rules that apply.
• Databases are not initially developed with transfer pricing analyses in mind, and the information in these databases may not be sufficiently detailed to support the pricing method you select.

Some databases do not provide data that allows for transaction comparisons but offer information that enables comparison of various financial key ratios between companies, see Selection of a comparability indicator.

The Norwegian Tax Administration will require detailed documentation of how you conducted the database searches. You must describe the choices you made, both regarding comparables included in the selection and those rejected.

Lack of comparable uncontrolled transactions

It can be challenging to find comparable transactions or companies within a market or specific industries.

Identifying comparable transactions or companies involves finding the most reliable data. Although the data may be incomplete, it may still be sufficient to establish a basis for comparison.

You can find examples of sources for external comparable transactions in the UN manual for transfer pricing. "The Platform for Collaboration on Tax" has also developed a guide on how to address challenges with missing comparables, "A Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses."

Requirements when you do not prepare a comparability analysis

If there are no internal comparables and it is disproportionately difficult or too costly to find external comparables, you must:

• Provide a justification for not preparing a comparability analysis.
• Describe the economic assessments and analyses you have conducted in connection with the pricing.

Regardless, you must explain why you consider the price set in controlled transactions to be in accordance with the arm's length principle.

The Norwegian Tax Administration' analyses and testing of the comparison bases

The Norwegian Tax Administration uses various sources to analyse internal and external comparable transactions and to test the comparison bases presented by companies. We use both publicly available information and commercial databases in these analyses.

When we prepare analyses to assess pricing in specific cases, we apply the same principles of an open, verifiable, systematic, and objective approach that we require from companies. The Norwegian Tax Administration will review the database searches you have presented and test the criteria you have used in the searches. You can request access and documentation regarding both the criteria used in our analyses and the underlying information and sources.