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2. The sales company will purchase the price of the product (a) from the producer company as an internal transfer price and sell it to the customer at the sale price (b) to achieve the flow of the product and profit distribution。
The terms of the transaction between the enterprise and its related parties are often different from those of the market between independent third parties and tend to result in the transfer of profits. In the case of multinational or domestic enterprises, as long as the pricing of related transactions does not lead to a reduction in the domestic tax burden, it is generally considered that tax regulatory requirements are met and do not raise major problems。
References
5. Transfer pricing functions
Transfer pricing can reduce tax burdens by reducing the taxable earnings of enterprises by adjusting the prices of internal transactions. The higher the income of the enterprise, the higher the applicable tax rate, as most countries use excessive progressive tax rates. Through reasonable price transfers, enterprises can distribute profits to low-taxed areas, effectively reducing overall tax levels and optimizing tax collection。
Transfer pricing can reduce tariffs at price, thereby reducing actual tax liability and reducing the burden of tariffs, through the special relationship of related parties in import and export trade, by adjusting quantities, shipments, etc。
Transfer pricing is primarily used to determine whether business-to-business transactions comply with fair-transaction principles. Both taxpayers and tax officials, when setting and assessing transaction prices, should choose the appropriate transfer pricing method to ensure that it is reasonable and consistent, that it truly reflects market transactions and that it avoids undue channelling of benefits。
9. Reference encyclopedia entries for transfer pricing。
Transfer pricing methods are described in the encyclopedia。
Https://soft. Zol. Com. Cn/1069/10698518. HTMLsoft. Zol. Com. Cn/1069/1069/108518. Com. HTMLreport9841, null2. The sales company will purchase products from the producing company (a) as an internal transfer price and sell them to the customer at the sale price (b) to effect the flow and distribution of profits. The terms of the transaction between the enterprise and its related parties are often different from those of the market between independent third parties and tend to result in the transfer of profits. In the case of multinational or domestic enterprises, as long as the relevant transaction is established...
