A Study on Accounting of Transfer Pricing and Its Effect on Taxation

Abstract

The dimension of accounting of transferpricing as one of the essential instruments of profit transfers betweenbusinesses has not been studied sufficiently. In this study, a review wasconducted on occurrence of transfer pricing and how accounting transactionswill be conducted required to be conducted by the entities. However, it isevaluated how transfer pricing will affect corporate tax. In order to make thestudy more concrete, the conceptual framework was revealed in the light ofprevious studies and accordingly a scenario was developed. In line withinformation in the scenario developed, it was indicated first how transferpricing was conducted, and then a recommendation was stated in the accountingrecords required to be conducted for improvement by the entities. However, taxeffect of the present case was determined before and after adjustment.According to such, it is concluded that related parties of transfer pricing shouldfollow a record process considering simultaneous movement form and off-balancesheet accounts in adjustment transactions.