CPM vs TNMM: What's the Difference?

Name: ArmsLength AI
Address: New York, United States
Telephone: +1-800-555-1212
Price range: $$$

Borys Ulanenko

CEO, ArmsLength AI

TL;DR - Key Takeaways

CPM (US) and TNMM (OECD) are essentially the same transfer pricing method with different names, both examining net profit indicators of related-party transactions.
Both methods use a 'tested party' approach, selecting the less complex entity without unique intangibles to benchmark against comparable companies.
These methods have become dominant globally due to practical advantages: tolerance for functional differences and easier access to comparable data.
Understanding jurisdictional nuances in implementation is crucial to prevent double taxation and successfully defend transfer pricing positions.
Case law shows that proper selection of comparables and consideration of unique intangibles are critical for a successful CPM/TNMM analysis.

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