Barnes Dennig Transfer Pricing After Tax Reform and COVID-19 120920 - BD | Page 5
WHY IS TRANSFER PRICING IMPORTANT ?
German Manufacturer Parent $ X profit
Auto parts
$ Y charge
U . S . distribution subsidiary $ Z profit
Retailers
German taxes 30 % of $ X
U . S . taxes 35 % of $ Z now 21 % of $ Z ( 2018 )
$ Y transfer price drives taxes payable by country
Intercompany price of goods , royalties , service charges , and loans all impact taxes paid by country