INTERNAL AUDIT AND TRANSFER PRICING: EVOLUTIONARY INSIGHTS

Abstract

Corporate groups, as a prevalent global organizational solution for economic transactions, offer risk mitigation but raise fiscal challenges. This study investigates corporate groups, entities that transcend their individual units, and examines the strategic importance of transfer pricing policies in managing intra-group relationships. Transfer pricing, identified as the top concern for over 80% of surveyed multinational companies, plays a critical role in these organizations. It creates fiscal implications in the interactions between entities within the same corporate group. The tax strategy often operates on a global scale, prioritizing the interests of the holding company and disregarding equitable income distribution among countries. Consequently, intercompany transactions facilitate the transfer of taxable items from high-tax jurisdictions to those with lower tax burdens, impacting national and international tax revenue. This study sheds light on the intricate dynamics of corporate groups, transfer pricing strategies, and their fiscal implications in the global economic landscape, highlighting the critical importance of transfer pricing policies in managing relationships within corporate groups.