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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Full cost based transfer price
Full cost based transfer price:
“Acceptable to tax and customs authorities in both multinational company and local subsidiary jurisdictions. The authorities in each country receive their appropriate share of corporate tax and duties as the transfer price approximates to the ‘correct’ cost of the goods.”
sir i just don’t understand how the transferring co’s tax authority will receive any corporate taxes? as in if transferring division transfers goods at full cost then there is no profit on which corporation tax will be payable by the transferring company.
This is APM rather than AFM !
However a full cost based transfer price does not mean transferring simply at cost. It means it is based on full cost so is full cost plus a profit margin.