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Transfer Pricing-

Nagaraju Pogula (Partner) (175 Points)

03 March 2008

What is transfer pricing ?

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Ritesh.D.jain (CA Job) (232 Points)
Replied 03 March 2008

Transfer pricing is simply the act of pricing of goods and services or intangibles when the same is given for use or consumption to a related party (e.g. Subsidiary) There can be either Market-based, i.e. equivalent to what is being charged in the outside market for similar goods, or it can be non-market based. Importantly, two-thirds of the managers say their transfer pricing is non-market based. There can be internal and external reasons for transfer pricing. Internal include motivating managers and monitoring performance, e.g. by putting a cost to imported inputs. External would be taxes and tariffs