What is Transfer Pricing for Startups?
Nexa Consultancy | Startup & Finance Glossary
Transfer Pricing regulations apply when a startup has transactions with its associated enterprises abroad (e.g., a foreign parent or subsidiary company). All such transactions must be at "arm's length price," as if they were with an unrelated party, to prevent shifting profits to lower-tax countries.
Startup Example: An Indian subsidiary of a US startup provides development services to its parent company. The price charged must be comparable to what an independent company would charge. If not, the Indian tax authorities can adjust the price and levy taxes and penalties.
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