Assignment: Transfer Pricing

Assignment 4: Transfer Pricing
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Assignment 4: Transfer Pricing
Transfer pricing is a concept that is critical for the manufacturers and sellers of cars to consider because of various reasons. This process involves the allocation of the various revenues and costs between different countries to aid in creating the best possible tax situation for the multinational automotive companies. This paper will highlight how the transfer pricing can help in mitigating taxes (Weygandt, Kieso, & Kimmel, 2010).
The automotive sector is one that involves voluminous transactions relating to both tangible and intangible goods, services, and finances in different borders. Automotive companies are thereby required to streamline their operations to adapt to the regional structures that will help them mitigate taxes in various transactions (Jackson, Sawyers, & Jenkins, 2009). The effective transfer pricing planning will help the US based company to reduce the exposure to tax and financial statement reserves in the various countries that it operates. The transfer pricing planning will also serve an essential role in the analysis and restructuring of the elements of boarder business to help in the identification of the drivers of profits in the organization. It will also help the company in streamlining its operations in the two countries that it will operate in. Transfer planning will assist the company in mitigating taxes by analyzing the transactions between various companies. This should include the tax audit history, the pricing, as well as the financial results (Jiambalvo, 2009).
In conclusion, transfer pricing to mitigate on taxes can be achieved through a number of ways. This includes allocating various resources and costs to the different countries to create a suitable tax situation. The effective transfer pricing plan should be developed and implemented to address the exposure to tax in various countries.
References
Jiambalvo, J. (2009). Managerial accounting. Hob...