Transfer pricing audit

A transfer pricing audit is a review conducted by tax authorities to ensure that multinational companies accurately price transactions—such as sales, services, or loans—between their own related entities in different countries. The goal is to confirm that these prices reflect market rates, preventing companies from shifting profits to low-tax jurisdictions and avoiding higher taxes in other regions. During the audit, authorities examine documentation and compare internal prices to comparable external prices, ensuring tax compliance and fair revenue collection for each jurisdiction involved.