Transfer Pricing - Business concept of the day
Definition: Transfer price is the price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments. Transfer prices are used when individual entities of a larger multi-entity firm are treated and measured as separately run entities.
Example: If a company headquartered in India, sells goods to a subsidiary based in Dubai, Transfer Pricing applies in making sure that the transaction occurs at a fair market value.
Business Insight: Almost 60% of international trade takes place via international transactions between Associated Enterprises.
Read more about Transfer Pricing here.
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