Thursday, October 4, 2007

Accounting for Industry-Specific Risks in a Transfer Pricing Setting

Strategically placing a firm's functions, assets and risks within specific tax jurisdictions can result in the multinational organization maximizing its overall after-tax profits by being taxed in lower tax jurisdictions. Such a strategy often requires that a transfer pricing analyst adequately determine the appropriate intercompany price between related parties based on a set of comparable companies. When searching for comparables, however, transfer pricing analysts often fail to place enough emphasis on finding companies that operate within the same or similar industry as the tested party.

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