IFRS and Transfer Pricing Certainly, Essay

Total Length: 373 words ( 1 double-spaced pages)

Total Sources: 1

For instance, a parent company that has a low level of ownership in a subsidiary may want to lower the price paid to that subsidiary to increase parent company profits. Or, if the subsidiary has a lower dividend payout, the parent may wish to pay a high price to that subsidiary to avoid larger dividend payouts at home. Further, high import tariffs at the parent's country may lead to lower prices at the exporting subsidiary in another country.
Likewise, high export tariffs in the subsidiary's country may lead to lower prices as well.

True, IFRS does not recognize does not directly recognize intra-group sales as direct profit generating transactions. However, indirect advantages of recognizing profits in specific countries come into play to impact profits......

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