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Quick note on the deletion of the PwC links. While I think it is useful to ensure that all of the Big 4 are represented in the external links, we need to make sure that any links provide the user with new information--the page linked was simply a listing of the transfer pricing-related services provided by PwC. jonny-mt 04:52, 14 May 2007 (UTC)


This page only discusses the the academic applications of transfer pricing. That's really only half the story (less than half the story really). Transfer Pricing among multi nationals is a huge issue, and I suspect that there are a number of people looking for information on that, only to find themselves facing supply and demand charts. Can a disccusion of actual transfer pricing occur here?

I agree with whomever made the point above. The relation of transfer pricing to business ethics is definitely the more important half of the issue. An economic description of transfer pricing should be in layman's terms, as it is not just economists who are interested in the issue. Article rewrite appropriate? Caravaca 18:42, 15 February 2006 (UTC)
I added some comments about transfer pricing in the context of International Tax (which is my day job). Gareth Green 22 September, 2006

go ahead Mion 00:53, 16 February 2006 (UTC)

Okay, I did. I added in a section on the practical application of transfer pricing including five major methods of calculating the arm's length price, the usage of APAs and MAPs, and so on. I included Gareth's comments as well, but I rewrote the introductory section and put all the economic talk and overly-large graphs into its own section. As an aside, I'm a TP analyst at one of the Big 4 in Tokyo, but the fact that I am fairly junior means that I can't guarantee that all of my facts or theory are right. Admittedly, I don't really have any reason to doubt them....--jonny-mt 05:15, 28 September 2006 (UTC)

I find your addition confusing:

Suppose there is a monopoly. The firm can choose a level of output, but should set the price accordingly, based on the demand curve.

I don't see how it applies to the article. Transfer pricing can be done by monopolists, ologopolists, pure competeitors, and monopolistic competitors. Likewise the MC=MR rule is also more-or-less universal (with some modifications). I think what you are saying is that a monopolist can either set a quantity and take the price dictated by the market, or set the price and take the quantity given by the market. They can set either price or quantity but not both. But more to the point, why is this included? If you think the concept of equating MC to MR is not clearly explained, then either put a link to the profit maximization article into the text, or add a short summary of the concept. Introducing the idea of monolpolies seems like a bit of a "red herring".- - user:mydogategodshat

The article is not very clear to me, but it seemed to me that it was concerned with determining a price by a company, so apparently it was not about perfect competition, and the simplest alternative of that is a monopoly. Maybe you should make clearer what market form you are talking about, which variables are given and which are varied, to find what kind of optimum. - Patrick 20:55 30 Jun 2003 (UTC)


Transfer pricing can be applied in any form of market, however, you are right that the diagrams would change slightly depending on whether its a monopoly, ologopoly, monopolistic competition, or pur competition. Primarily the slope of the demand and marginal revenue curves would change. But the profit maximizing procedures are still more-or-less the same. The main variant is in the extreme case of perfect competition where the demand curve is perfectly elastic at the market clearing price, and as a consequence MR=D=AR=P. The diagrams I constructed are somewhere in the middle of the market forms continuum. They most closely depict monopolistic competition. But I don't think we should get diverted into the difference between market forms in this article. It would surve little purpose to go into that here (plus I don't want to draw four sets of diagrams). There are other articles that go into the details of profit maximization under monopoly, pure competition, ologopoly, and monopolistic competition. -- user:mydogategodshat

Okay, I deleted the part about monopoly. For now, I do not understand enough of the article to decide where to start making edits. But I would expect remarks such as that it does not make any difference for the firm as a whole what the transfer price is, except perhaps for taxes, but that the law may require a realistic price. And that the transfer price could also be determined by pretending that parts of the firm are independent firms, therefore each maximize their own profit. - Patrick 22:20 30 Jun 2003 (UTC)
The relationship between transfer pricing and tax law is extremely complex. I would dread writing that article. user:mydogategodshat
I added a remark about taxes. - Patrick 07:31 1 Jul 2003 (UTC)

remake

Well, thats a complete remake of this article, dunno who made it, it needs a cleanup to follow wikistandards, maybe me , i think its worth it, later on. Mion 01:09, 12 April 2006 (UTC) It looks like work in progress.I'll wait a week Mion

merge old and new version

User talk:Mydogategodshat , made a request to merge the both versions. Mion 03:48, 12 April 2006 (UTC)

This is a copyed text

COMMUNITY ECONOMICS Multinational Operations

Transfer Pricing and Taxation by Manfred Davidmann

In layman's terms

Here's my explaination in layman's terms. Could be useful for someone rewriting the article.

Basically Tranfer Pricing is just a way to move your profits and it's commonly done to pay less tax. It's as simple as that! All you have to do is sell your goods at a higher price or lower price so that more profit is made in the country with the lowest tax. Simple. You just raise the price in the place with the higher tax. Jago25 98 17:32, 21 April 2006 (UTC)jago25_98

Please check out the new info to understand why that's not quite right. --jonny-mt 05:17, 28 September 2006 (UTC)

Restructure & revision

I will attempt to conform the "practical application" section to actual US/UK/Canada/China/OECD rules, which all differ materially from the discussion presented. I'll post some thoughts here first (within the next 2 weeks). I believe re-titling the sections would be appropriate, to include the following:

  • bigger, more inclusive introduction
  1. Economic theory
  2. Pricing for tax purposes
    1. Broadly applicable concepts & methods (adjustment vs. initially setting prices, best method, transaction-based methods, comparability, etc) (Query: should this be a major heading itself?), penalties, documentation, cost sharing, APAs
    2. US variations (note: may make this US/Canada, as they're pretty close if you ignore the terminology)
    3. OECD variations
    4. New China rules
  3. Reading list (treatises)
  4. Links to government sites

I think it's important to differentiate between OECD and US concepts in some areas. Further, the new China rules are a material departure from OECD-like concepts.

Also, proper weight by section will be important. Heavy focus on a few routine cases that were spectacular only by their size isn't a good idea. Further, the application of the principles among commonly controlled entities within a single country must be given some coverage: historically, most of the US and UK cases were domestic.

Comments? Sfcardwell (talk) 03:18, 11 May 2010 (UTC)

Draft has been posted to my talk page. I'm still working on citations. Comments??Sfcardwell (talk) 02:28, 14 June 2010 (UTC)

Major revision posted, slightly expanded (mainly China section), with references improved, from draft I posted 14 June (UTC). This revision adds/enhances the following:

  • Organized similarly to OECD guidelines
  • Provides section on broadly applicable principles, as well as sections indicating rules/differences specific to OECD, US, and China
  • Provides significantly enhanced discussion of comparability guidelines
  • Enhances cost sharing and APA sections
  • Enhances discussion of services and intangibles
  • Provides additional reading list for multiple countries

I have not deleted any of the non-compliant links. I think it is useful to readers to have links to the Big 4 discussions of TP, as well as some other highly reputable (though private) links, as these all provide good analyses beyond what's in the law.

This article can still use further improvement by other subject matter experts. Thanks in advance to those who help. Sfcardwell (talk) 04:09, 9 July 2010 (UTC)

minor edit

I reverted the addition of "which" to the second sentence. It rendered the sentence incomplete. I resisted to revert the removal of "120 words" from the link of the law: Wordcount function in MS Word lists that section as 127 words. Hard to believe, but true. I agree that it's superfluous, though. Oldtaxguy (talk) 02:46, 27 November 2010 (UTC)

Transfer mispricing

Right now this article is categorized as tax avoidance, but transfer pricing is not, in itself, a scheme for avoidance unless it is manipulated. We should probably either link transfer mispricing or merge that article into this one. - tychay (tchay@wikimedia) (talk) 22:30, 9 August 2012 (UTC)

I have proposed deleting the article, which contains no new or useful information, only links to inflamatory pieces by lobbying organizations, and an apparent editorial. See Talk:Transfer mispricing.Oldtaxguy (talk) 20:17, 10 August 2012 (UTC)

Deleted material from questionable sources

I have deleted material sourced only to lobbying sources. Tax Justice Network is a political lobbying organization, and is not a reliable source. The article in Al-Jazeera (not itself a very RS on tax issues) was authored by an employee/"fellow" of another international political lobbying organization. The third citation is from an organization affiliated with the second organization, and whose website appears to feature a picture of the author of the Al-Jazeera article.

Manipulative transfer pricing can occur in any jurisdiction. To be fraud, however, there must be transfer pricing rules that are being broken, or there must be inducement of action based on misrepresentation. The example uses Africa, where there are typically no transfer pricing rules. (Notable exceptions include Namibia, South Africa, Uganda, and Zambia, each of which has at least rudimentary rules.) Transfer pricing issues arise only with respect to commonly controlled entities. Thus, in jurisdictions with no rules, how can any pricing, regardless of motivation, be fraud?

The attempt to create a term "transfer mispricing" appears, itself, to be a lobbying effort of the above mentioned groups.

A paragraph or even section on actually fraudulent transfer pricing might be nice. It should cite reliable sources, not the popular press in countries with no or limited income tax. Oldtaxguy (talk) 00:26, 21 August 2012 (UTC)

Introductory text - criticism

The introductory text is way too long and still doesn't specifically address the numerous tax issues, nor explains the basic concept concisely. It urgently needs a revamp. --Philipp Grunwald (talk) 17:43, 9 December 2012 (UTC)