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Company Registration India » Legal Taxation Services » Transfer Pricing
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 Transfer Pricing
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Transfer pricing is basically the act of pricing of goods and services or intangibles when the same is given for use or consumption to a related party. Transfer pricing refers to the pricing of contributions transferred within an organization. The prices are set within an organization, the typical market mechanisms that establish prices for such transactions between third parties may not apply. The choice of the transfer price will have an effect on the allocation of the total profit among the parts of the company. This is a main concern for fiscal authorities who worry that multi-national entities may set transfer prices on cross-border transactions to reduce taxable profits in their jurisdiction. This has led to the rise of transfer pricing enforcement and regulations, making transfer pricing a major tax compliance issue for multi-national companies.
Transfer Pricing is inherent in the way the global economy is structured with sourcing and consuming destinations being different, with several organizations operating in multiple countries and most importantly due to varying tax and other laws in various nations.
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