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castillo66 castillo66
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6 years ago
What is a transfer price? Why are transfer prices used?
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International Business

International Business


Edition: 15th
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WindozWindoz
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A major tax challenge, as well as impediment to performance evaluation, is the extensive use of transfer pricing in international operations. A transfer price is a price on goods and services sold by one member of a corporate family to another, such as a parent to its subsidiary in a foreign country. Because the price is between related entities, it is not necessarily an arm's-length price, that is, a price between two companies that do not have an ownership interest in each other. Companies establish arbitrary transfer prices primarily due to differences in taxation between countries. Companies also may set arbitrary transfer prices for competitive reasons or because of restrictions on currency flows.
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castillo66 Author
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6 years ago
Exactly what I needed to answer this question

Thanks!
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