Tax transfer pricing: understand the rules for global business
If your company is active in more than one country, you may already be dealing with tax transfer pricing. This rule is about how you set prices for goods, services, or money transfers between different branches of the same company across international borders. Tax authorities want to make sure that these internal prices are fair and based on market value. This prevents companies from moving profits to countries with lower tax rates and avoiding taxes unfairly. For your business, it means being careful, clear, and compliant.
How fair pricing helps your company
The most important rule in transfer pricing is the “arm’s length principle”. This means that prices used in your internal transactions should be the same as those you would charge or pay to an unrelated company. If your prices are not realistic, tax authorities may think you are trying to shift profits on purpose. This can lead to audits, penalties, and extra taxes.
That’s why it’s important to keep good documentation. You need to show how your prices were set and prove they are fair. This includes business reports, contracts, and market research. Most countries follow the OECD guidelines, which are global rules for fair and legal transfer pricing.
Get support to avoid risks
Managing this part of your business well is not just about rules—it’s also smart business. A tax expert can help you build a strong pricing strategy and handle all the needed paperwork. This reduces the risk of mistakes, saves time, and protects your company during tax audits.
Do you want to be sure that your company is following all rules around tax transfer pricing? Then it’s smart to get professional advice. With the right support, you reduce risk, stay compliant, and focus on growing your business in international markets with more control and confidence.
