Transfer pricing and taxation
Taught by Nick Drape · AI tutor support included
You'll learn how transfer pricing can be used to minimise a business's overall tax liability when divisions operate in different tax territories.
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In this lesson
- 0:00 Transfer pricing and tax minimisation
- 0:46 Understanding arm's length pricing methods
- 2:09 Comparable uncontrolled price approach
- 3:03 Resale price and cost plus methods
- 5:39 Legal compliance and profit shifting risks
- 6:12 Worked example: high and low tax territories
- 10:18 Chapter recap and key takeaways
About this lesson
This video explores the tension between profit shifting and regulatory compliance, covering the three main methods for determining arm's length transfer prices: comparable uncontrolled price, resale price, and cost plus approaches. You'll understand why tax authorities insist on fair transfer pricing and work through practical examples to identify how low or high transfer prices impact profit allocation across high and low tax territories. This is essential knowledge for Performance Management and Advanced Performance Management, where transfer pricing decisions directly affect both divisional performance evaluation and organisational tax strategy.
Duration: 13m
Transcript
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