International Transfer Pricing: Privileges and Detriments

Authors- Maryam Salwan Sabri, Mr. Avinash Bondu

Abstract- Transfer pricing has been representing a key position in the contemporary accounting world, that facilitates the Multinational corporates, to lower the burden of tax by transferring their products to the subsidiary nations or vice versa, to get the advantage of tax benefit with increased or decreased costs of sales. Multiple scenarios have been registered tracing out the implementation of transfer pricing by the companies to deceive the governments by paying less taxes. This research considers the transfer pricing policies of a parent company with its respective subsidiaries and the corresponding tax rates, and provide numerical evidence of how the transfer pricing is benefiting both parties, the MNC and the governments. Forecast of the financial statements for four years of Apple company are made by dividing the proportion of production of the company in two countries and the results exhibit a substantial margin for the companies implementing transfer pricing policies. Governments of the corresponding parties experienced a lot of difference in the tax revenue as well. Suggestions are provided that legal compliance by the organizations are required to balance the benefits for both the parties and the society.

DOI: /10.61463/ijset.vol.12.issue3.175