Barnes Dennig Transfer Pricing After Tax Reform and COVID-19 120920 - BD | Page 10
HOW DO SOME COMPANIES APPROACH TRANSFER PRICING ?
Pharmaceutical Company Parent ( Cure for the Common Cold )
U . S .
Ingredients
France
Pharmaceutical Manufacturing subsidiary
U . S .
Royalty Charge
France
• Company has one cost plus policy – ( Cost + 10 %)
• Company operates as one “ borderless ” business
• US plant manager increases transfer prices � higher US profits � bigger personal bonus