In this article, the author explains the concept of location-specific advantages, analyses when and how they should be allocated between multinational enterprise (MNE) groups based on the guidance provided in the United Nations Practical Manual on Transfer Pricing for Developing Countries (the UN Manual), Action 8 of the Action Plan on Base Erosion and Profit Shifting (Action 8), and in light of recent case law. Further, the approach adopted by the Indian and Chinese authorities is discussed.