Transfer Price

This is a procedure used in the pharmaceutical and other industries to exploit the differences in tax rates in different countries. For example, when a manufacturer transfers goods to overseas subsidiaries, a high price is charged to those operating under high tax regimes so that the subsidiaries will have relatively low profits and a low price is charged to subsidiaries in low tax regimes, which will have larger profits. The idea is to achieve a net tax saving to the parent company from its global operation.

Was this article helpful?

0 0

Post a comment