Who Needs to Comply with U.S. Transfer Pricing Rules?

Many people assume transfer pricing applies only to large multinational corporations. In reality, businesses of all sizes may be subject to U.S. transfer pricing rules if they have transactions with a related company in another country.

Generally, transfer pricing applies whenever two or more related parties engage in a cross-border transaction. A related party may include a parent company, subsidiary, sister company, branch, or another entity under common ownership or control.

You may need to consider U.S. transfer pricing rules if you are:

• A foreign company doing business in the United States through a U.S. subsidiary or affiliate.
• A U.S. company with one or more subsidiaries or related companies in other countries.
• A business that shares services, employees, intellectual property, or financing with a related company overseas.
• A multinational group with companies located in different tax jurisdictions.

Next, let’s look at some of the common examples of transfer pricing transactions.