Question & Answer: Is international transfer pricing about more than tax minimization? Why or why not?…..

The growth in the global flow of goods and services and the increase in cross-border mergers and acquisitions have dramatically increased the volume of intrafirm trade. Transfer pricing relates to the pricing of goods and services that change hands between entities engaged in intrafirm trade. some estimates inidcate that intrafirm trade makes up fully half of all global trade. As one observer put it, a multinational company ” can prodice its products anywhere using resourses from anywhere by as subsidiary located anywhere to a quality found anywhere, to be sold anywhere.

Transfer pricing is a profit allocation method used to attribute an MNE’s net income (profit or loss) to the tax jurisdictions where it operates its subsidiary controlled foreign corporations (CFCs). The transfer price is defined as the price charged between related corporate entities for goods or services in an intercompany transaction

Stakeholders who are affected by a company’s cross border transfer pricing policies as below:

Transfer prifing has many internal constituents such as management, employees, stakeholders etc and as well as external consuituents such as domestic and foreign government agenceis , competitors, customers , suppliers.