what are the applications of transfer pricing ?
Answers
Explanation:
Why Organizations need to understand Transfer Pricing
In these cases, transfer pricing helps in allocating revenue and expenses to such subsidiaries in the right manner. The profitability of a subsidiary depends on prices at which the inter-company transactions occur.
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Explanation:
investigate and identify which transfer pricing methods are applied in related companies in Croatia, as well as to give certain recommendations that would improve the control of transfer pricing in Croatia. The primary data for this study were collected through the survey which was conducted on a sample of related companies from the real sector in Croatia in 2008, and again in 2012. Results obtained in this study indicated that the issues related to transfer pricing still are not significantly represented and understood in business practice in Croatia. The research results also showed that the majority of related companies in Croatia apply the cost method of determining the transfer prices. Furthermore, the research results showed that in 2008 the comparable uncontrolled price method was the most frequently used OECD method of determining transfer prices in related companies in Croatia, while in 2012 all OECD methods of determining transfer prices were equally applied.
Keywords: Transfer pricing, transfer pricing methods, related companies, multinational companies, arm’s length principle, OECD
JEL classifications: M40, M41, M21, L14