The Reason for Transfer Pricing
Transfer pricing exists because of the interdependence I talked about before. This impacts many organizations, not just the multinationals, because it creates a problem in determining at what price goods and services are transferred between divisions. The reason for transfer pricing is to meet several needs of the organization as a whole.
Are you wondering what the rewards are for going through the stress of getting the right transfer price for goods and services that move around your organization?
The primary objective of transfer pricing is to ensure that, while respecting and protecting the autonomy of the divisions, we are able to redistribute the economic resources within the organization in such ...