Pistis and Associates

Transfer Pricing

Transfer Pricing is one of the most challenging tax issues that multinationals across the world face today, as international regulations now require stricter compliances and detailed information about pricing intercompany transactions.

Transfer Pricing Regulations across the globe demand that every transaction between a related party is at arm’s length.

The “arm’s-length principle” of Transfer Pricing states that the amount charged by one related party to another for a given product must be the same as if the parties were not related.

Incidence of Transfer Pricing:

Transfer Pricing provisions come into play under the following circumstances:

  • When business is divided into more department or division in the same country and;
    » Management requires to identify activities of the business that generate value.
    » A division of the group provides services or transfers goods to another division of the same company, and profitability of each division is required to be determined;
  • In the case of cross border transactions:
    » When transactions whether relating to tangible goods, services, finance or intellectual property take place between entities under common ownership and control.

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