Transfer Pricing

Services and products are exchanged within organizations between the various centers or departments. These services or products have a monetary value, the value of which needs to be attributed to the respective cost centers and departments. The price at which these goods and services are transferred can be determined and charged using structured OLAP models. The transfer volumes and prices may use various factors in determining the transfer prices being used between the different centers or departments. This structured approach is also becoming more fundamental in justifying inter company/departmental charges across country borders to the respective revenue/tax authorities. Other issues such as profit incentives also make this area very sensitive.

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