Transfer Pricing

Economics

The practice of setting prices for transactions between related entities in different countries.

Sources

1. OECD — Transfer pricing oecd.org accessed 23 September 2026

The OECD states that its “work on transfer pricing aims at eliminating double taxation through the application of the arm’s length principle as set out in the OECD Transfer Pricing Guidelines”, which it calls “the global standard for pricing related-party cross-border transactions” that “help to prevent and eliminate tax disputes, and to promote a level playing field for tax administrations and businesses”. The framing worth keeping is that the arm’s length principle exists to stop the same profit being taxed twice as much as to stop it being taxed nowhere.

The OECD’s own description. The Guidelines are a separate publication and no edition year is quoted here; national transfer-pricing rules, including India’s, apply on their own terms.

Related terms

• Balance of Payments
• Credit Rating
• Current Account Deficit
• EURIBOR
• Exchange Rate
• Foreign Direct Investment

From the AJG lexicon archive (July 2026).