Cash management considerations tend not to be the major determinants of transfer pricing policy.

Question

Quizplus · Accepted Answer

Cash management considerations (such as managing working capital, currency fluctuations, and tax optimization) are important factors in transfer pricing, but they are not the major determinants of transfer pricing policy. Transfer pricing policy is mainly driven by the arm's length principle, which requires that transactions between related parties be conducted as if they were unrelated and independent parties dealing at arm's length. This principle aims to ensure that profits are allocated appropriately between related entities and that taxes are paid in the jurisdictions where the economic activity takes place.

Cash Management Considerations Tend Not to Be the Major Determinants