Question

Transfer pricing refers to:

• A. Tariffs that change the value of goods when they are traded
• B. The movement of factors that causes changes in prices
• C. The over or under-pricing of goods in intra-firm cross-border trade of multinational companies
• D. The price at which skilled and professional workers are transferred by companies.

Hint:

Think about how multinational companies operate.

Answer 1

The Correct Option is C

Transfer pricing establishes prices for cross-border transactions of goods, services, or intangible assets between related business entities, such as multinational subsidiaries. This practice allows for the shifting of profits between jurisdictions to achieve tax benefits. Consequently, option (c) is the correct answer.