Transfer price

A price charged for goods or services between entities that are related to each other through stock ownership, such as between a parent and its subsidiaries or between subsidiaries owned by the same parent. One problem with transfer price is that if the company charges too high a price to a subsidiary, it may end up paying higher tariff duties, although it may pay lower income taxes in the foreign country. If the company, on the other hand, charges too low a price to its subsidiary, it can be charged with dumping.