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Part 1
Transfer pricing is a contentious issue for almost any company where divisions buy from or sell to each other. Stated another way, transfer pricing causes more conflict between divisions than almost any other issue.
What is you experience or knowledge about this issue? How do you suggest that it be resolved?
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Part 2
Read the Following Articles & Comment:
Economist Special Report https://www.economist.com/news/special-report/21571557-corporate-profit-shifting-has-become-big-business-price-isnt-right
What Facebook & Apple Can Teach You About Transfer Pricing https://www.forbes.com/sites/timworstall/2016/07/29/facebooks-fun-with-transfer-pricing-and-joe-stiglitz-doesnt-understand-apples-tax-at-all/#4eaced603838
Expert Answer
Transfer pricing should be substance based and strong facts o that it can result in greater values. This will also emphasize on the value creator. The location of these value creators will also impact the income from the transfer pricing. Even the risks and assets will be considered in dealing with the transfer pricing. The issue of transfer pricing can be resolved by using a more comprehensive method of value creators which will help the firm to judge the various elements which create value in the finished product. The induction of perception of the firm in the society can also play a major role in transfer pricing.
In case of Apple and Facebook, the transfer pricing is mainly to do with those points in the production process where some kind of values are created. These value creation are not limited up to employees or sales. This kind of transfer pricing becomes more complicated when we talk about the service industry.
In case of Facebook and Apple, as both the firms are operating in the USA thus the taxes on value creation will be levied in the USA only.
