The Arm's Length Principle for Fair Transfer Pricing


 
Transfer Pricing > Forum

The Arm's Length Principle for Fair Transfer Pricing
Anneke Zwart, Student (University), Netherlands, Moderator
For transfer pricing to be fair, a so-called Armís Length Principle needs to be applied. This principle states that the price charged by one party to another should not be influenced by the relationship between the parties; parties must behave as if they are independent from each other.
For multinational companies this means that the price charged for transferred goods must not be higher than the price of the product sold domestically. In this way the transfer prices reflect the prices on the open market.
Source: Korn, E., & Lengsfeld, S. (2007). Duopolistic competition, taxes, and the arm's-length principle (No. 378). Discussion papers/School of Economics and Management of the Hanover Leibniz University...Sign up
 

   

Special Interest Group Leader

Interested? Sign up for free.


Transfer Pricing
Summary
Forum
Best Practices

Expert Tips

Resources
 



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.0 - Last updated: 21-2-2019. All names ô of their owners.