Transfer Pricing In Egypt

Introduction

Transfer pricing refers to the rules and methods for pricing transactions between Related parties or entities under common ownership or control. In the context of multinational enterprises (MNEs), it governs the value assigned to cross-border transactions involving goods, services, royalties, loans, or intangible assets exchanged between subsidiaries, branches, or affiliates of the same corporate group.

The concept is critically important because it directly affects how profits are allocated across different tax jurisdictions. Without proper regulation, companies might manipulate transfer prices to shift income to low-tax or no-tax regions, thereby minimizing their global tax liabilities. For instance, a firm might underprice goods sold from a high-tax country to a related entity in a tax haven, artificially reducing taxable profits in the former and increasing them in the latter.