Transfer Pricing Regulations Engulfs Market Intangibles

Trade in today's global era visualizes significant number of international transactions in form of transfer of goods, services, capital and intangibles. International transfers arise within the Multinational Enterprise group entities and are called intra-group transfer. What is actually paid by one entity to another entity in the intra-group transfer is called the transfer price. Such transactions are controlled transactions as they are between two associated enterprises. Transfer pricing adjustment enables the tax administration of a country to correct the transfer price and compute the same on arm's length price (ALP), to check, avoid and ensure correct payment of taxes. ALP simply means fair market price. The OECD Transfer Pricing guidelines for multinational enterprises and tax administration and United Nations' Practical Manual on Transfer Pricing outlines several international aspects relating to transfer pricing.