OECD - Transfer Pricing

Chapter 1

Transfer Pricing - Background

  • Multinational Enterprises (MNEs) are being targeted by Revenue Authorities in a blitz on large businesses involved in cross-border transactions. This stems from concerns about MNEs booking profits in foreign jurisdictions and not attributing their fair share of profits, and hence tax, to the jurisdiction where value is created.

  • Rapid advancement in technology, transportation and communication have given rise to a large number of multinational enterprises (MNEs) which  have  the  flexibility  to  place  their  enterprises  and  activities anywhere in the world.

  • Hence it follows that a significant volume of global trade nowadays consists of international transfer of

    1. goods and services
    2. capital (such as money) and
    3. intangibles (such as intelectual property)
    within  an  MNE  group. Such  transfers  are  called  “intra-group”  transactions.

  • There  is  evidence  that intra-group  trade is growing steadily and arguably accounts for more than 30 percent of all international transactions. @2014-2023 All rights reserved
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