CONCEPTUALIZATION OF APPROACHES TO TREATING THE ESSENCE OF TRANSFER PRICES AND TRANSFER PRICING

Abstract

The article examines pressing aspects of transfer pricing within contemporary economic conditions, recognizing its role as a fundamental instrument utilized by multinational corporations and its substantial impact on corporate financial strategies. The aim of the study is to elucidate and theoretically substantiate conceptual approaches to interpreting the essence of transfer pricing. To accomplish this objective, the research systematizes and synthesizes scholarly perspectives on defining transfer pricing, identifies the principal conceptual frameworks applied in its interpretation, and presents the author’s own understanding of its essence in light of current economic developments. The methodological foundation of the study includes analytical and systematization techniques for reviewing theoretical positions; logical generalization for delineating conceptual approaches; and deduction, comparison, synthesis, and analysis for formulating the author’s interpretation of the examined category. Furthermore, the research justifies a set of general and specific functions characteristic of transfer prices and outlines the key objectives necessary for ensuring effective transfer pricing practices. The scientific contribution of the study is reflected in the refined conceptualization of “transfer pricing,” achieved through the integration and critical assessment of contemporary interpretative approaches. Based on the conducted generalizations, transfer pricing is defined as an instrumental model for determining the value of intra-group transactions carried out between related parties within a single corporate structure. Its essence consists in establishing pricing parameters that account for the legal relationships between the participants, the economic substance of transactions, and potential fiscal implications, thereby enabling an effective alignment of corporate strategy with tax planning and ensuring financial balance within a consolidated management system. Future research prospects include identifying and substantiating the tools of transfer pricing from the perspective of evaluating their effectiveness under current economic conditions. The obtained results, conclusions, and recommendations may be useful for managers of multinational corporations and enterprises engaged in foreign economic activity.