These prices affect any company, regardless of its size.
The aim is to pursue related-party transactions that may be altered, with the aim of manipulating the companies' tax results.
Transparency pricing is a preventive measure to avoid tax fraud . The transparency price (or transfer price) would be the real market price of a certain good or service. It is a standard to detect transactions manipulated with certain interests, such as altering free competition or paying less taxes.
Transparency pricing is based on OECD (Organisation for Economic Co-operation and Development) regulations, which aim to ensure that transactions between corporations from different countries conform to the reality of the market in which they take place.
Transparency pricing is a mechanism to control tax fraud.
Why is a transparency or transfer price necessary?
Let's imagine two companies that belong to the same business group. Company A sells various raw materials for the production of a product at an excessively low price to company B. Why would they do this?
Because in this way company A will pay less taxes, having oil and gas email list marketed at a lower price than the real one. This will reduce the taxable base to be applied to profits in the Corporate Tax (IS).
For its part, company B will be able to market its product with a higher profit margin, which could also adulterate the equal competition that is supposed to exist in the markets.
Transparency prices are precisely there to avoid this type of action. They serve therefore to establish a value for the good sold in accordance with its real cost in the market.
They therefore try to avoid this type of manipulation, which is mainly pursued by the Tax Agency, as it means less tax collection , by having artificially reduced sales. This leads to less collection for the aforementioned IS, and also in VAT.
Sage
Transparency prices mainly affect affiliated companies with a high turnover.
How are transparency prices set?
There are different methods for setting transfer prices. The first of these is to take as a reference transactions of a good or service that have taken place recently between other companies and within the same market.
Another way is to check other sales or purchases that the companies involved have made to other companies that belong to their environment. In this way, it is also possible to easily detect whether transactions between certain corporations with common interests or that belong to the same business group have been tampered with at some point.
