The Arm's Length Principle for Fair Transfer Pricing


 
Transfer Pricing > Forum Log in

The Arm's Length Principle for Fair Transfer Pricing
Anneke Zwart, Student (University), Netherlands

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

 
   















 

    Do you wish to study further? You can learn more from the summary, forum, discussions, lessons, courses, training, instructions, expert tips, best practices and education sources. Register.  


Special Interest Group Leader

You here


More on Transfer Pricing
Summary
Forum
Best Practices

Expert Tips

Resources

About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2017 12manage - The Executive Fast Track. V14.1 - Last updated: 25-7-2017. All names tm by their owners.