Transfer pricing is a process where prices or rates used when selling products or services between parent companies, divisions, departments, or subsidiary (SMULLEN, 2001). It exists when two related companies (the parent company and a subsidiary) trade amongst each other. For example, a US based subsidiary of Coca-cola trading with an African subsidiary of Coca-cola. When such subsidiaries engage in price establishments for a transaction the results are transfer pricing.
WITTENDORFF (2010) provides that in transfer pricing the prices set for the exchange may be the original prices set for the products or the original purchase price or a rate reduced to cater ...
