transfer price definition

transfer price

Price charged by individual entities for goods or services supplied to one another in multi-department, multi-office, or multinational firms. Transfer price policy is generally aimed at (1) evaluating financial performance of different business units (profit centers) of a conglomerate, and/or to (2) shift earnings from a high tax jurisdiction to a low-tax one. Tax authorities usually frown upon transfer pricing aimed at tax avoidance and insist that each internal part of the firm deals with the other on 'arm's length' (market price) basis. Also called transfer cost.

transfer price is in the Accounting & Auditing and Economics, Politics, & Society subjects.

transfer price appears in the definitions of the following terms: transfer cost, market price, upstreaming and unitary tax system (UTS)

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