| Abstract: | A distinguishing characteristic of the multinational corporation is its ability to determine with some discretion the prices at which intra-firm transfers of goods and services are recorded. The incentives to manipulate such transfer prices in pursuit of global corporate objectives are often substantial. This paper examines the potential for abuse of the transfer pricing tool by multinational corporations, considers the adequacy of legal rules or guidelines for the setting of transfer prices and the extent to which corporate practice conforms with such guidelines, and assesses the prospects for more effective governmental control of transfer pricing policies. |
