Transfer pricing is one of the most important issues in international tax and as a result also needs disclosure under IAS 24 Related party disclosures.
Transfer pricing is the general term for the pricing of cross‐border, intra‐firm transactions between related parties. These transactions can include transfers of intangible property, tangible goods, or services as well as loans or other financing transactions.
Most countries’ transfer pricing legislation is based on the ‘arm’s length principle’.
Transfer pricing methodologies
There are a number of transfer pricing methodologies for determining the arm’s length basis of a transaction. For example, the OECD recognises Comparable Uncontrolled Price, resale price, cost plus, transactional net margin, and transactional profit split methods as acceptable but other methods can also … Read more