“AN ANALYTICAL STUDY OF TRANSFER PRICING”

Taxation

Globalization has removed all the geographical boundaries, which provides a lot of opportunities for the growth of business but it also creates a problem in front of tax authorities because taxes are imposed within the boundaries of the Nation. Multinationals Companies are the result of globalization which wants to expand their business in more than one nation of the globe but they have to pay very crucial part of their income as tax to various nations. So to mitigate and reduce their tax liabilities entities follow many practices, transfer of goods and services to their subsidiaries or associates enterprises is one of them. The fact is that, nowadays the trade has become global trade which consists of international transfers of goods and services, capital and intangibles within a MNE group; such transfers are called “intra‐group” transactions. The arrangement of transactions within group of MNEs (“associated enterprises” in the language of transfer pricing) can be fixed by a combination of the market and group.

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