NATURE AND ESSENCE OF TRANSFER PRICING

Abstract

Introduction. The theme of transfer pricing has received enough attention from the scientific community and an already formed idea about this phenomenon mainly through the prism of the requirements stipulated by the Tax Code of Ukraine. Many scientists endow the definition of transfer pricing with systemic qualities, while most believe that it is a process, and there are also those who consider the transfer pricing mechanism or tool for resource allocation. There are scientists who endow transfer pricing with negative characteristics as a means of minimizing or avoiding paying taxes. Such an approach to revealing the essence of this phenomenon is somewhat limited, but the context in which it is used can serve as a justification for such a categorical characterization. Our task is to understand the objective nature of transfer pricing and provide a neutral, unbiased definition. Purpose. The purpose of the article is to reveal the concept of transfer pricing in the context of the process of economic activity of transnational companies (TNCs). Analysis of the interpretations of this concept by various scientists will allow us to determine the prevailing scientific vision that forms a conceptual relationship to the phenomenon. But the main goal is to provide one's own, unbiased and comprehensive definition of a TP. Methods. As research methods to achieve the set goal, general scientific methods of cognition were used, including: analysis – to clarify the essence of the concepts of "TNCs", "transfer price"; deduction – when categorizing the transfer pricing as a process, system, method or institution; synthesis – when formulating one's own definition of the concept of transfer pricing. Results. The domestic scientific environment, the definition of "transfer pricing" is debatable, as it serves exclusively the direction of research developed by the scientist. If we analyze the approach in the interpretation of transfer pricing, then it should be conditionally divided into two large groups: the process and the system of setting the price. There are also those researchers who consider transfer pricing a mechanism or tool for resource allocation. In our opinion, transfer pricing should be considered a managed process of profit distribution within a group of related companies, by assessing the value of resources transferred within such a group along the value chain of the final product in order to obtain competitive advantages in certain markets at a certain time. Conclusion. Having studied all the diversity of views from the side of domestic scientists on such a phenomenon as transfer pricing, it can be concluded that the peculiarities of the development of corporate and tax culture in Ukraine also had an impact on the perception of transfer pricing as a mostly artificial process of profit redistribution within an international group of companies in order to optimize the tax burden. Our task was to provide a more comprehensive definition of transfer pricing, which we believe succeeded.