An Introduction to Transfer Pricing

Abstract

This publication provides a comprehensive overview of transfer pricing, an essential aspect of international taxation affecting multinational enterprises (MNEs) worldwide. It discusses the principles, legal frameworks, and regulatory approaches, including guidance from the OECD and UN, to address the challenges of cross-border intra-group transactions. The document explores the complexity of establishing arm’s length transaction prices, compliance costs, and the mechanisms such as Advance Pricing Agreements (APAs) to facilitate effective transfer pricing management. Emphasizing the importance for both developed and developing countries, it highlights evolving practices aimed at preventing tax base erosion, ensuring fair taxation, and fostering international cooperation in transfer pricing regulation.