Transfer Pricing in International Business

Management Reporting

So far in this chapter, we have looked at the management issues that surround the topic of transfer pricing. The one thing we have not really considered up to now is how an organization should actually deal with the complete transfer pricing process, which presents a formidable challenge. Specifically, they seek to solve the problem of achieving a transfer pricing system that:

• satisfies the needs of the organization with respect to strategy and internal incentives;

• results in an efficient use of resources; and

• provides the right transfer pricing answer from the perspective of the various revenue authorities.

What we need is a reporting system that will help us understand the organization’s performance in these key areas. ...