What is transfer pricing?
Transfer pricing is the framework that governs the pricing of transactions between related entities, including goods, services, intellectual property and financing arrangements. Potentially applicable to both international and domestic operations, transfer pricing affects how income and expenses are allocated among entities and taxing jurisdictions, making it a key area of tax compliance, planning and controversy.
Successful transfer pricing balances compliance and commercial realities. Organizations must establish, document and support intercompany pricing policies that align with the arm's-length principle, applicable tax regulations, and the Organisation for Economic Co-operation and Development (OECD) guidance while remaining operationally effective and defensible under tax authority scrutiny.
How transfer pricing works
Determining arm's-length intercompany prices requires an understanding of how value is created among related entities. This analysis considers the functions performed, risks assumed and assets employed by each entity, as well as the economic terms of the intercompany transaction.
The objective is to establish pricing consistent with the terms that independent parties would agree to under comparable circumstances. This arm's-length standard is the foundation on which tax authorities worldwide evaluate whether intercompany pricing yields supportable, market-based outcomes.
How RSM supports transfer pricing compliance, planning and strategy
RSM helps organizations develop and execute transfer pricing strategies that support broader business, tax and operational objectives across the full transfer pricing lifecycle. From policy design and value chain analysis to implementation, documentation and controversy support, our teams work with clients to build practical, defensible transfer pricing frameworks aligned with Section 482 regulations, OECD guidance and the realities of how the business operates.
Rather than approaching transfer pricing solely as a compliance exercise, RSM advises organizations on how intercompany pricing can adapt to growth, transformation and changing tax authority expectations. We help clients assess the transfer pricing implications of entering new markets, restructuring supply chains, integrating acquisitions and responding to evolving business models, while also preparing documentation, benchmark studies and economic analyses that support compliance with U.S. and international requirements.
As global scrutiny of intercompany transactions continues to increase, organizations need transfer pricing policies that are not only supportable, but also operationally sustainable and responsive to risk. RSM helps clients align transfer pricing outcomes with documented policies, business functions and strategic priorities, while preparing for tax authority review and managing controversy with confidence.
