International transfer pricing
International transfer pricing applies internal transaction prices across jurisdictions. Besides motivation and performance measures, it raises tax, customs, currency, legal and reputational considerations. Tax rules can require arm’s-length pricing and documentation, but the applicable requirements must be checked for the jurisdictions and period. A management decision price is not automatically a lawful tax price. Avoid presenting profit shifting or one universal tax rate as an uncomplicated optimisation technique.
Worked example
A group’s cost-based internal price must be evaluated separately for divisional incentives and for compliance with the relevant cross-border tax rules.
Common mistake
Do not assume the price that maximises a manager’s reported result is acceptable to tax authorities or best for the group.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Supporting | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |
