Transfer pricing - Financial definition
Financial acronyms
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Concise definition of the term transfer pricing
Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities having the same owner.
Comprehensive definition of the term transfer pricing
For example, if a subsidiary company sells goods to a parent company, the cost of those goods is the transfer price.
Because of the potential for cross-border controlled transactions to distort taxable income, tax authorities in many countries can adjust intragroup transfer prices that differ from what would have been charged by unrelated enterprises dealing at arm’s length.