Transfer pricing is an accounting practice that establishes the prices for the good and services exchanged between two divisions of the same company or affiliates or subsidiaries of the same holding company.
It is based on market prices and can also be applied to intellectual property. This practice extends beyond borders and allows MNC’s to allocate earnings amongst the various subsidiaries and branches. Transfer pricing is sometimes inaccurately presented as a tax avoidance practice however it is a set of substantive and administrative regulatory requirements imposed by governments on certain taxpayers. We provide consultancy services on transfer pricing litigations and more.
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