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Transfer Pricing

Rules governing pricing of transactions between related entities across borders.

Transfer pricing refers to the rules and methods for pricing transactions between related entities within a multinational enterprise. The arm's length principle requires that these transactions be priced as if they were between unrelated parties. Transfer pricing regulations aim to prevent companies from shifting profits to low-tax jurisdictions by manipulating intercompany prices for goods, services, or intellectual property.

Related Terms

Corporate Tax

Tax levied on business profits and corporate income.

Tax Treaty

An agreement between countries to prevent double taxation.

Double Taxation

When the same income is taxed by two different jurisdictions.