Transfer Pricing in Concept

Transfer pricing is the term given to the process and determination of pricing the assets transferred between related firms of a multinational company across different tax jurisdictions. Multinational subsidiaries can be located in a variety of different foreign countries. They may sell their own finished products direct to their own foreign markets or to affiliates for marketing, and or semi-finished products to related companies in their own multinational group as part of a collective production and distribution system involving company units in more than one country. Assets other than physical products that enter into or relate to production and sales are also subject to such transfers.