Company and Government Interests

Abstract

From the point of view of multinational enterprises, International Transfer Pricing is an instrument to manage internal markets efficiently. It serves their goals to maximise global profits and minimise their business risks. Yet, from the viewpoint of a host government, International Transfer Pricing itself is a potential problem in that it can create losses of taxation revenue, and therefore negatively affect the national economy. For developing countries, owing to their lack of institutional frameworks and administrative expertise to analyse complex transfer pricing situations, their economies are more vulnerable to transfer pricing manipulation than those of developed countries.