The tax implications of international transfer pricing

Abstract

Transfer pricing is concerned with the terms that related parties use when they conduct business with one another. This issue is of particular importance for multinational groups that conduct business with each other across international boundaries. The transfer pricing policy adopted by such group will often have a significant effect on the profits or losses that are reported in each of the countries In which they do business. For this reason, international transfer pricing is of paramount importance both for the multinational groups themselves and for tax authorities all over the world. Furthermore, the issues raised by this topic have increased and multiplied in recent years due to the proliferation of MNEs that have overrun the world thanks to the process of globalisation, which has well nigh transformed the world into a global village.