The Transfer Pricing is an essential and highly significant consideration for making business transactions optimally profitably between subsidiaries of a company or multinational business corporation. This transfer pricing mechanism helps in lowering taxes and maximizing the profits, by separate divisions of a multi-entity corporation, through transacting their goods or products at the selected transfer prices. This transfer pricing mechanism is used in every country, for such transactions at domestic or international level, by entities in all economic sectors. But, before proceeding further, it would be better to clarify first what is transfer pricing, giving the solid transfer pricing definition. The transfer pricing is the analysis or mechanism for setting the most suitable and beneficial prices to one's goods or products, for the purpose of making sound and profitable business dealing with associated companies or divisions. This transfer pricing analysis is inevitable when different divisions or entities of Multi-entity Corporation are considered as separately run entities, with their one independent business losses and profits. The transfer pricing policies in most of the countries are in compliance with the OECD Guidelines which are based on the Arm's Length Principle. More information about this "arm's length standard" is given exclusively in the section below.