‘Transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control. Because of the potential for cross-border controlled transactions to distort taxable income, tax authorities in many countries can adjust intragroup transfer prices that differ from what would have been charged by unrelated enterprises dealing at arm’s length’. According to Rogers and Oats (2022), ‘The arm’s length principle (ALP) is the basis of the tax transfer pricing rules in most
countries and is used to determine an arm’s length transfer price: the price that would be used if the same transaction were undertaken by unrelated third parties’.
Transfer pricing can be used as global strategic intervention for companies’ to shift income of one affiliate to another affiliate located in an overseas jurisdiction’ ‘to maximize firm value using their international business structure’ ( Yoo, 2020).
Further Open resources on Transfer pricing
Rogers, H., & Oats, L. (2022, January). Transfer pricing: changing views in changing times. In Accounting Forum (Vol. 46, No. 1, pp. 83-107). Routledge.
Yoo, J.S., 2022. The effects of transfer pricing regulations on multinational income shifting. Asia-Pacific Journal of Accounting & Economics, 29(3), pp.692-714.
