Question

What is transfer pricing ?why do transnational corporations resort to transfer pricing?​

Answer 1

A transfer price is the price paid for an exchange of goods and services between related affiliates of the same transnational company TNC. In most instances this involves either the parent firm trading with a subsidiary or two subsidiaries of the same TNC trading with each other.

Answer 2

Between corporates,  if they exchange goods or use resources  from one division to another division , the price paid for this service is called as transfer price.

why because ,this transfer pricing is mainly used to avoid the corporate tax avoidance