Transfer Pricing
‘Transfer pricing’ refers to the setting of prices for the provision or supply of goods, services and intangible assets within a multinational business.
Transfer Pricing can affect how profits are allocated
As related-party ‘controlled’ transactions they are not governed by market conditions. The choice of transfer price can affect how profits are allocated within the organisation and is a major concern for national tax authorities
Transfer Pricing should adhere to the arm’s length principle
To ensure a fair distribution of tax revenue, Organisation for Economic Co-operation and Development (OECD) guidelines and the local tax laws of most economies require that transfer prices adhere to the arm’s-length principle
