The price that is assumed to have been charged by one part of a company for...
The price one unit of a company charges to another unit of the same company for goods or services exchanged between the two.
The operations of a multinational corporation operating in one country often supply inputs to other parts of the firm operating in another country. To calculate how much profit is made by the corporation in each country, one needs to know the value of these intra-firm international sales. Determining these values is called transfer pricing. Firms have incentive to inflate the transfer prices of sales from low-tax regions to high tax regions since this tends to reduce total tax payable.
practice of multinational companies of selling components from a high tax country to a subsidiary in a low tax one at an artificially low price.
The price level at which merchandise is sold between related firms, such as subsidiary company to the parent company.
The price charged between profit centres, for example, between a manufacturing company and its foreign subsidiary. p. 643
The type of pricing used when one unit in a company sells a product to another unit within the same company. p. 580
Overpricing of imports and/or under-pricing of exports between affiliated companies in different countries for the purpose of transferring profits, revenues or monies out of a country in order to evade taxes.
setting prices for outputs exchanged between divisions. p. 400
The pricing of goods or services transferred from one segment of a business to another. See: interplant transfer.
Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be sold to a foreign subsidiary, with the choice of the transfer price affecting the division of the total profit among the parts of the company. This has led to the rise of transfer pricing regulations as governments seek to stem the flow of taxation revenue overseas, making the issue one of great importance for multinational corporations.
