Accounting - Thoughts on Transfer Pricing

[Silvestru]

I know this is a mismatch, boring topic on this forum but there are a lot of knowledgeable people with experience in a wide variety of subjects so I wanted to get your opinion.

 

Transfer pricing relates to the price applied to intercompany transactions. These transactions can include the sales of products, the provision of a service, the lending of money and the use of (intangible) assets.

 

A simplified example of this is that you can be a multinational company with headquarters in Germany for example, open a branch or even a "mailbox" company in a tax heaven country (Bahamas, Bermuda) with 0 corporate tax and keep 100% of the profits.

 

I oppose taxes in general so I am not taking a side between this Corporate-Government conflict, I just want to get your opinion on what you think/what you would change about this process that takes place in all major companies.

 

Here is a short video that better explains what transfer pricing is.

 

Edited July 5, 2017 by Silvestru

[DrP]

QUOTE "I oppose taxes in general"

 

... so, do you oppose the fire brigade, police and army services, ambulances street cleaners, education and road maintenance too?

 

 

Video won't play for me here - will try again later. It does sound like a loop hole but surely if it was that simple surely every company would do it.... maybe then the loop hole would be shut if too much money was lost. (or maybe they'd keep it open in return for a few back handers). Personally I think govs should and probably will clamp down harder on companies that bend the rules and find little loopholes to avoid taxes in the future. Taxes are a good thing for the population of the world - if managed properly I believe we could end starvation and poverty in the world and develop great new things... the place could be a paradise but it is full of corruption and greed.

[Silvestru]

Every multinational company is doing it. Maybe not to tax heavens necessarily but every big company is using Transfer Pricing.

 

I do not oppose "the fire brigade, police and army services, ambulances street cleaners, education and road maintenance too" but we can pay for these services directly like you pay for electricity and not taken from taxes. Trust me, all these services would benefit from such a change. Tax money is poorly controlled, poorly attributed to where it needs to be:

 

"Trump on track to spend exorbitant amount of taxpayer dollars on travels. A watchdog group once calculated that the Aloha state trips cost taxpayers $3.5m a pop – in airfare, security arrangements, communications and medical staff."

 

The people you hear going on strike are teachers, firemen and all the ones mentioned by you. Doesn't seem like they are getting enough of that tax money