Transfer pricing is a method of setting prices in transactions between members of a group of companies or other interdependent entities used to reduce the tax burden. The transfer price is the price set in transactions between these companies as a result of such pricing.
The transfer price is the price set in business transactions between different departments of a single company or between members of a single group of companies. The activity of setting prices between such companies is called transfer pricing. Transfer prices allow you to redistribute the total profit of a group of individuals in favour of individuals located in states with lower taxes. This is the simplest and most common scheme for minimizing taxes paid.
Price is a crucial component when determining the income taxable base.