An Article on Transfer Pricing: Global Tax Issue

Transfer pricing refers to setting up of price for receipt/provision of goods or services by related legal entities of the same group. Transfer pricing study from a tax perspective is relevant for fair allocation of profits among various legal entities of MNCs incorporated/functional under different jurisdictions. The major purposes of this study are to understand the concept of Transfer Pricing and the steps required for preparing Transfer pricing Report/Documentation, to identify the risk associated with Transfer pricing and to analyze the reasons of its increasing scope nowadays. Transfer pricing in an economy is very significant to corporate policy makers, economic policy makers, tax authorities, and regulatory authorities.