Transfer Pricing Career Guide and Counseling

Question: what is meant by transfer pricing tax strategy? its an accounting related matter. I guess the question would be what sort of tax planning and tax strategies can be utilized with regards to transfer pricing. or vice versa.

Answer: This is an international tax issue. It comes into play when a factory in one country produces a product that will then be used in producing a final product made in another country. (i.e. The product is a Yo-Yo. The string is produced by 123 Corp, a subsidiary of XYZ International in Japan. It is then shipped to ABC Inc, another subsidiary, in the US where it is added to the yo-yo. Since the product is crossing borders, and each subsidiary has different tax issues, Japan and US, the "price" 123 charges ABC must have "economic effect". The transfer price calculation is very complex. Many accountants have made careers out of this section of the revenue code. The main strategy is to price the product so that the tax will be minimized in both countries. Unfortunately, to answer this question here would require too much space and too much time.

Question: How do I relate transfer pricing to vertical integration.? Thank you for all your answers. I'm finding this topic quite hard beacuse I am a relatively new economics student. I would be grateful for your answers.

Answer: Vertically integrated groups of companies are those where the group produces many/most of the components of an end-product as well as assembling the end-product itself. These days most Western companies are not highly vertically integrated. Indian car companies might be examples where they make a lot of the components in house. IBM on the computer mainframe side might be an example - since it makes some of its own chips (which are components of the mainframe). Transfer prices are the prices at which one part of the group sells its components to another part. Where a group buys a high proportion of the components of a product internally, there is much more scope to adjust the transfer prices to generate the most profits in a low-tax jurisdiction.

Question: Can somebody give me an example CASE OF TRANSFER PRICING? i need to make a paper about transfer pricing (international accounting) and i can't find a REAL case to support my paper, could anyone please help me? thanks in advance

Answer: Here's an example from the consulting industry. Take a project manager who's based in Germany, so he's part of Germany's local profit and loss accounting. Now a client in Japan is asking for that particular expertise, so the Japan office is staffing this guy on its project. Well - what's Germany getting out of it? The project is in Japan, the client pays the fees to the Japan office. In this example, the transfer price is the price the Japan office has to pay the Germany office for use of this guy. It's an internal price that may or may not be equal to the external price the client is paying for the guy. But it serves the purpose of giving the German office something to benefit from - an incentive to give the guy up for the duration of the project. If there were no transfer price, Germany would not send the project manager to Japan - they would sell his service locally. Different example - heavy industries. Let's say GE is commissioned to build a new power station somewhere. The overall construction effort may be contracted through GE Power Systems. But in addition to generators, they may need switching technology, light fixtures, etc. GE Power Systems would "purchase" the things it doesn't make itself internally at trasnfer prices and then sell them on to the customer as part of the construction project. The reason for the transfer price is the same as above - it's an incentive for GE Automation to provide their switchboards and control circuits for this project instead of selling them on the open market. The transfer price is always a tricky issue, of course. The "selling" unit would like to see it as high as possible because they argue they can get a better price in the market. The "buying" unit always tries to push it down, arguing that internal sales are risk-free business that doesn't generate marketing or selling expense. Some companies have static rules on transfer prices (in the case of the consulting company above, it's the project manager's market rate discounted by 15%); other companies create more of a market and let the "buying" and "selling" unit slug it out case-by-case. Some go so far as allowing their business to source components outside (e.g. from competitors) if the internal price isn't acceptable.

Question: What are the problems encounter when using cost-plus transfer pricing method?

Answer: Tarc College student ar ?? Lolx. I'm finding that answer too.

Question: What is the answer to Shuman Automobile transfer pricing and responsibility accounting case? Harvard Business School case number 177 - 033

Answer: The Keyword Market Standard The #1 Selling Marketing Software in The World HoT! ClickAdEqualizer: Adwords Software. Adwords Software Like No Other! Become A Super Affiliate Overnight! http://iphi1618.aequalizer.hop.clickbank.net http://iphi1618.aequalizer.hop.clickbank.net http://iphi1618.aequalizer.hop.clickbank.net http://iphi1618.aequalizer.hop.clickbank.net

Question: What does transfer pricing mean? What does transfer pricing mean? Why do international business sometimes manipulate transfer prices?

Answer: TP (as the groovy tax people call it) is the price charged for goods/services between two related parties, these parties are always in a different country/tax jurisdiction. Different countries have different tax rates and because of this, companies may manipulate the transfer price in order to take advantage of the more 'tax friendly' countries. Eg, Company T sells produces and sells coffee. The coffee beans are manufactures in 'X' country and sold to 'Y' country. X country has a tax rate of 10% Y country has a tax rate of 40% In this situation, company T may look to raise the price (the transfer price) of the beans sold to company Y from co X in order for co. X to make a bigger profit. This explanation is simplified but basically TP determines how profit is allocated between to subs

Question: Any Body Knows Where Can i Find Sovled Numericals Of Transfer Pricing ?

Answer: This question is miscategorized. Special Education refers to the education and parenting of children with special needs.

Question: What are the purposes of transfer pricing?

Answer: The purpose of transfer pricing is two fold: 1) The main reason is driven by taxes - corporations want to pay a little tax as they are able so they reducing profits by adding expense through a higher transfer price. 2) To 'add' centralized expenses (accounting, IT, marketing, etc) to sales made in different regions of the world. Taxing authorities look very closely at how the transfer price is built.

Question: transfer pricing in brazil- definition of related party? A (USA) company sell CKD materials to B comapny (Contract manufacture located in Brazil). B company manufacture and then sell the finished goods to C company (brazilian company). A company and C company have the same parent company, but both have no relationship with B company . Based on Brazil TP rule, should C company need to do transfer pricing adjustment for this kind of transaction? If C company insist it's not related party transaction and don't do any TP adjustment, does it comply with Brazil TP rule?

Answer: Even if it's wrong , what can you do about it in Brazil?

Question: Want catchy names for our Newsletter - name to convey - Transfer Pricing+Technical+Business Development?

Answer: "The Price is Right"

Question: why is transfer pricing important to multinational organisations in developing countries? how has the governments controlled this mulitnational countries as a way to go forward? what is the internet and state its advantages and disadvantages

Answer: sorry i dont know

Question: does anyone know/do transfer pricing's job? do you know whats transfer pricing assoicate acutally hv to do?

Answer: Transfer pricing is something required by states and national governments for tax purposes. Basically, it is the process of making sure items owned by a corporation that are transferred from one part of the corporation to another which happens to be in a different tax jurisdiction are transferred at a real price, not one made up to maximize the differences in taxing schemes. For instance, one jurisdiction might have no tax on the value of owned materials. Another the company does business with may. So the company transfers (sometimes only on paper, not making a physical transfer) materials (an oil prospecting company might transfer rigs and piping) to the one that has a tax on turnover, but not property in time for the property tax to be computed on a smaller lot of property. Then transfers materials back in time to use them where needed. Basically, the idea is to avoid allowing corporations to work the different tax regimes the way currency traders work the international money market. Another, much lesser, reason for it is so corporations have a truer picture of expenses that go into the generation of sales. Much lesser. Tax avoidance is the main goal. Naturally, taxing jurisdictions regard this as tax fraud and prosecute it as viciously as they can. They regard the corporation's officers as the guilty parties, not the schmucks who perform the illegal activities. That gives corporations a pretty good reason to be careful about transfer pricing, in order to accurately reflect market prices for transfers (as if the receiving division were buying in a wholesale market, rather than be supplied by another division). That is more or less the idea and the job is putting the idea into practice. One does this by having a wide knowledge of market pricing. Know enough (and document it) and the actual day of the transfer can be very important as it will allow taking advantage of a momentarily low (or high) market price when transferring. Depending on one's needs.

Question: What is "Transfer Pricing"? I am an Econ graduate finishing my PhD and I see lots of jobs in differnt corporations under this title. My specialization is in the area of International Trade and Finance and the Macroeconomics of International. I was wondering if I could read up some material to familiarize myself with Transfer Pricing and maybe land a job. Thanks in advance to all who answer.

Answer: http://en.wikipedia.org/wiki/Transfer_pricing

Question: Management accounting. Transfer pricing? I have an exam on monday and im really struggling with transfer pricing. I cant figure out how to do it. Does anyone know where I could find good notes that could explain exactly how to do it.

Answer: Not really notes. But I think transfer pricing is about where an organisation uses companies in various countries. Expenses, such as overheads, are allocated out to these countries. The various tax rates means that some countries are better than others to allocate expenses to. But laws and accounting standards regulate this area. Companies tend to do their accounting in a way that maximises profits within the laws and standards.

Question: Transfer Pricing : An Accounting Trick? Why Transfer Pricing is called as an Accounting Trick ? Please explain with Scenario ?

Answer: it's more of a tax trick, really. it let's an entity choose where it wants to report its revenues and costs especially if it operates in different tax jurisdictions. it may want to pass on goods at higher transfer prices to locations where it has high profits (or where taxes are higher) to reduce the tax burden. if it's exporting to another country, it may want to lower transfer prices down if customs duties are high. if another country or state offers net loss carry overs, it's often a good idea to pass goods at high transfer prices. just a few scenarios to help you get the idea.

Question: What is the minimum transfer price the Food Division should accept? Management of the Catering Company would like the Food Division to transfer 10,000 cans of its final product to the Restaurant Division for $88. The Food Division sells the product to customers for $140 per unit. The Food Division’s variable cost per unit is $60 and its fixed cost per unit is $20. The Food Division has 10,000 units available capacity. Any CPA can help me with this plzzz

Answer: If is transfer price just above the variable cost per unit could make it.