Transfer Pricing

A transfer price arises for accounting and taxation purposes when related parties, such as divisions within a company or a company and its subsidiary, report their own profits. When these related parties are required to transact with each other, a transfer price is used to determine costs. Transfer prices generally do not differ much from the market price.

Transfer price is a price that represents the value of goods or services between independently operating units of an organization whereas “transfer pricing” refers to prices of transactions between associated enterprises that may take place under conditions differing from those taking place between independent enterprises.

Transfer pricing generally refers to the price at which goods or services are transferred between associated enterprises. These transactions can include sales of products, provision of services, lending of money, and use of (intangible) assets. Thus, the effect of transfer pricing is that the parent company or a specific subsidiary tends to produce insufficient taxable income or excessive loss on a transaction. For instance, profits accruing to the parent can be increased by setting high transfer prices to siphon profits from subsidiaries domiciled in high tax countries, and low transfer prices to move profits to subsidiaries located in a lower tax jurisdiction.

To simplify, the prices and conditions applied between related parties under the transfer pricing policy should be appropriately within the range of prices and conditions charged between independent companies.

We offer a holistic range of following services Like: -

  • Applicability
  • Helping to use best method for Computing Arm’s Length Price
  • Documents required to be maintained
  • Safe Harbour rules and its applicability
  • Audit Under Transfer pricing
  • Appeals
  • Country by country reporting