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 involves setting the prices for transactions between related business entities, such as subsidiaries of a multinational company, for goods, services, or intangible assets traded across borders. This practice can be used to shift profits between jurisdictions for tax benefits. Hence, the correct answer is (c).