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Transfer Price
(redirected from Transfer Prices)

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Transfer price
The price at which one unit of a firm sells goods or services to another unit of the same firm.

Transfer Price
The price a division of a company charges a different division of the same company for a good or service. Transfer prices are important especially for large, decentralized corporations where each division reports its own profits and losses separately. The transfer price is usually roughly the same as the market price for the good or service. See also: Section 482.

transfer price
The price at which an item is transferred internally between two units of the same company. An oil company engaged in drilling, refining, and marketing must determine the price of the product as it is passed through the chain from oil field to service station in order to determine the profitability of each stage.


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International transfer prices create opportunities for multinational firms to shift profits between divisions located in high-tax countries to those in low-tax countries.
Instead of taking the company's own internal prices set on the transaction, which might not always reflect market rates, government agencies issue guidelines that are used to calculate transfer prices.
A firm with operations in more than one country must be cautious when setting transfer prices for goods or services sold between divisions.
 
 
 
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