ACCG 315 ASSIGNMENT: TOPIC: Transfer Pricing Question: Clearly explain why you consider Issue & disputes over transfer pricing between divisions as key issue of transfer pricing, why they need to be...

TOPIC: Transfer Pricing
Question 1):
Topic area: Transfer Pricing
Clearly explain why you consider Issue & disputes over transfer pricing between divisions as key issue of transfer pricing, why they need to be addressed now, what are the implications of these issues for the accounting profession (including society and community). (Subsection 7.2) (400 - 450 words)
Transfer pricing is the appropriate price which a company keeps for its r intra‐group, cross‐border transfers of goods, intangibles and services. It is the pricing between the related prices. It takes into consideration the transaction between the related parties. When the pricing in such case does not adhere to the applicable norms, then the tax authority would consider it as the incorrect pricing. This case was seen for SNF, where the company was reporting high revenue and sales but still in the end incur losses and did not pay any taxes on the same.
SNF group is a French multinational company having its operations in Australia. The company is a multinational chemical distributor. The Australian company has the history of sustained losses in transfer pricing analysis. Because of this the company never paid any taxes to the government and the case was brought forward. (SNF, 2010)
The case rested on the comparable uncontrolled pricing method, which indicates the third party pricing for the identical products and services. Dr. Becker stated that comparable uncontrolled pricing method cannot be used in the case of transfer pricing as the level of market for all distributors is different. He insisted on using the transactional net margin method where the median benchmark profit and cost of sales is analysed. It is a relevant method used for transfer pricing includes TNMM, the profit method can be applicable only when the methods like CUP, resale minus or the cost plus method cannot be used.
The issues and...