It is possible to hide profits with transfer prices.

Question

Quizplus · Accepted Answer

Transfer prices refer to the prices at which goods or services are bought and sold between different departments or units of the same company or between related companies within the same group. Since transfer prices are internally negotiated, it is possible for companies to manipulate them in order to hide profits and reduce tax liabilities. This practice is known as transfer pricing manipulation, and it is often used by multinational companies to shift profits to low-tax jurisdictions or tax havens where the tax rates are lower. As a result, transfer pricing manipulation can have a significant impact on a country’s tax revenue and can create an uneven playing field for businesses.

It Is Possible to Hide Profits with Transfer Prices