The Essence of Transfer Pricing Mechanism and Risks of International Companies Arising with its Use
https://doi.org/10.21686/2413-2829-2023-2-93-100
Abstract
Today companies, including international ones function in harsh conditions of external instability, thus they try to optimize their financial results in different ways. One of them is mechanism of transfer pricing, which gives an opportunity to redistribute cash flows inside the company and thus to minimize taxes to state and to optimize final finance result. The article discusses the essence of the mechanism of transfer pricing used by international companies and identifies external and internal goals of its use. The author studies legislative base of transfer pricing, analyzes the current methods applied to control deals between interdependent persons, finds their key characteristics and possibility of use. It was found out that transfer pricing is subject to strict control on the part of tax bodies and it can lead to serious finance risks of companies. They are risks arising directly in case mechanism of transfer pricing is used and risks of insufficient, ‘thin’ capitalization. Taking these indicators into account can help forecast and later minimize potential finance risks of the company.
About the Author
A. I. Tsyganova
Plekhanov Russian University of Economics
Russian Federation
Alena I. Tsyganova Post-Graduate Student of the Department for Finance of Sustainable Development
of Economics, 36 Stremyanny Lane, Moscow, 117997
Russian Federation
Alena I. Tsyganova Post-Graduate Student of the Department for Finance of Sustainable Development
of Economics, 36 Stremyanny Lane, Moscow, 117997
References
1. Vdovina K. A. Pravovye osnovy ispolzovaniya metodov transfertnogotsenoobrazovaniya [Legal Basis for Using Transfer Pricing Methods]. Alleya nauki [Alley Science], 2021, No. 10 (61), pp. 608–612. (In Russ.).
2. Kakaulina M. O., Khmura S. V. Etapy gosudarstvennogo regulirovaniya transfertnogo tsenoobrazovaniya i perspektivy ego razvitiya v epokhu tsifrovoy ekonomiki [Stages of State Regulation of Transfer Pricing and Prospects for its Development in the Digital Economy Era]. Vestnik UrFU. Seriya ekonomika i upravlenie [Vestnik UrFU. Economics and Management Series], 2019, No. 5, pp. 681–708. (In Russ.).
3. Kriklivets A. A. Znachenie deyatelnosti TNK v Rossii i za rubezhom [Significance of TNC Activity in Russia and Abroad]. Molodoy uchenyy [Young Scientist], 2019, No. 7, pp. 36–38. (In Russ.).
4. Nagornykh M. G. Model otsenki sovokupnogo finansovogo riska v kontroliruemykh sdelkakh po vnutrigruppovomu finansirovaniyu [A Model for Assessing the Total Financial Risk in Controlled Intergroup Financing Transactions]. Vestnik Rossiyskogo ekonomicheskogo universiteta imeni G. V. Plekhanova [Vestnik of the Plekhanov Russian University of Economics], 2015, No. 2, pp. 89–94. (In Russ.).
5. Panferova O. O. Transfertnoe tsenoobrazovanie: ekonomicheskaya priroda i sfera rasprostraneniya. Diss. kand. ekon. nauk [Transfer Pricing: Economic Nature and Scope. PhD econ. sci. diss.]. Moscow, 2013. (In Russ.).
6. Filonov A. O. Upravlenie finansovymi potokami na osnove transfertnogo tsenoobrazovaniya. Diss. kand. ekon. nauk [Management of Financial Flows Based on Transfer Pricing. PhD econ. sci. diss.]. Moscow, 2014. (In Russ.).
7. Sheina E. G., Astanakulov O. T. K voprosu o povyshenii effektivnosti finansirovaniya subektov khozyaystvovaniya i transfertnom tsenoobrazovanii [On the Issue of Improving the Efficiency of Financing Business Entities and Transfer Pricing]. Finansy i kredit [Finance and Credit], 2019, No. 10, pp. 2281–2303. (In Russ.).
8. Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations – Available at: https://www.oecd.org/tax/transfer-pricing/oecd-transfer-pricing-guidelinesfor-multinational-enterprises-and-tax-administrations-20769717.htm (accessed 10.09.2022).
Review
For citations:
Tsyganova A.I. The Essence of Transfer Pricing Mechanism and Risks of International Companies Arising with its Use. Vestnik of the Plekhanov Russian University of Economics. 2023;20(2):93-100. (In Russ.) https://doi.org/10.21686/2413-2829-2023-2-93-100
Views:
440
Email this article 