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Is transfer pricing separate from corporate income tax?

The purpose of transfer pricing is to ensure that all transactions between related persons are priced at an arm’s length basis. Transfer pricing is a concept used for taxation purposes; it is not in and of itself a tax (such as VAT). However, the underlying principle of transfer pricing (arm’s length) is one that should be reflected when calculating taxable income (tax base). This is to assure that profits are not displaced through related person transactions, thus guaranteeing that tax on profit is levied justly. Any transfer pricing change will drive to a recalculation of the corporate income tax base.
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Last Update: 04 Sep 2020 06:06 PM Saudi Arabia Time