Transfer pricing: fit for purpose

Debbie Green on the evolving transfer pricing rules and alternatives to the arm's length principle

Transfer pricing is fundamentally a simple concept. Where a parent company trades with its subsidiary; or two subsidiaries under common control trade with each other on a cross-border basis, tax authorities in each relevant country want to tax their share of the group profit. In order to measure the profit which each country should tax, the transactions between group companies need to be priced.

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