Transfer Pricing in Cross-Border Transactions


This practice note discusses the transfer pricing rules, which are of key importance in cross-border transactions, including: (1) sales of products between countries and entities, (2) sales of businesses, (3) intercompany service relationships, (4) leases and licenses, and (5) outbound and inbound transfers of intangible property (IP). The purpose of the transfer pricing rules, found under I.R.C. Section 482 and its regulations, is to prevent "commonly controlled" taxpayers from artificially shifting taxable income from the U.S. to lower or no-tax jurisdictions.