Conceptual Problems of Estimating Transfer Prices in Transactions of Related Parties in the Implementation of Tax Control

The article analyzes the conceptual and practical problems in the field of tax control of transfer prices in transactions between interdependent participants, and provides an overview of the methods of their assessment. The lack of publicly available information on prices, the lack of comparable transactions, and the high labor cost of a comprehensive analysis of the financial and economic activities of related firms limit the control of public authorities in this area. The application of the basic concept of “at arm’s length” in the implementation of tax policy is not always consistent with the strategies of financial management firms that seek to optimize not only tax payments, but also other economic indicators. The transfer pricing mechanism (hereinafter referred to as the TC) affects the costs, profits, and output volumes of all participants in the chain, so the choice of the optimal level of domestic prices for the supply of components should be based on target criteria. The “arm’s length” concept does not take into account firms’ motives for vertical integration and consolidation. The task of the interdependent participants is to organize the production process in such a way as to increase the efficiency of the entire technological chain. Choosing a specific pricing policy within complex “fan-shaped” structures with many levels and links is a peculiar method of coordinating work in a system based on integration. The application of a market-based approach to determining domestic prices should be complemented by a mechanism for adjusting them, which will achieve the planned targets for various participants in the chain. The article substantiates that in the implementation of tax and industrial policy it is important to ensure a balance of interests of various parties: the state and business. On the one hand, it is necessary to prevent tax evasion as a result of the withdrawal of enterprises’ funds abroad, on the other hand, it is important to understand the nature and functions of transfer prices, which serve as a tool for optimizing financial and economic performance of fi rms. Within the framework of the current legislation, a compromise solution is provided – agreed transfer pricing.