How inflation can impact your transfer pricing policies?

Learning CentreTransfer Pricing FaqsHow inflation can impact your transfer pricing policies?

How inflation can impact your transfer pricing policies?


Inflation affects transfer pricing policies through the pricing of goods and services that are exchanged between related entities.


When inflation is high, the cost of goods and services increases, so the prices of those goods and services must also increase to reflect the higher costs. When setting transfer pricing policies, firms must take into account inflation rates to ensure that prices reflect the current market value of goods and services.

Inflation can also affect the amount of profit that a company earns on the sale of goods and services to related entities, since the higher prices may not be fully reflected in the profits. In addition, inflation can cause currency fluctuations, which can impact the value of transactions and make it difficult to set consistent transfer pricing policies.

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