Methodological Aspects of Transfer Price Formation and Their Relationship to Tax Policy Objectives

The article discusses current issues of tax regulation of transfer pricing in supply chains with vertical and horizontal connections (DHW).

The article provides a theoretical and methodological description of the mechanism of functioning of modern production supply chains based on model structures, taking into account the vector of tax policy. It is substantiated that in order to successfully implement the tasks of producing high-tech products, it is necessary to have a reasonable combination of tools for a well-thought-out tax and industrial policy of the state, which does not contradict the objective trends of increasing the competitiveness of domestic enterprises. In this regard, the implementation of tax policy should be carried out taking into account the understanding of the motivation of firms to choose domestic prices.

It is proved that for the successful implementation of national tasks for the production of high-tech products, a reasonable combination of tools for a well-thought-out tax and industrial policy of the state is necessary, which does not contradict objective trends in increasing the competitiveness of domestic enterprises. In this regard, the implementation of tax policy should take into account the understanding of firms’ motivation to choose domestic prices.

The aim of the study is to deepen the methodological basis for describing the interaction of participants in the production and technological chain in the process of transfer pricing.

The methodological basis of the research was the theory of industry markets, the provisions of neoclassical theory, the institutional approach, as well as the methodology of intersectoral balance. Methods of work – comparative analysis, economic and mathematical modeling.

The article analyzes two approaches to determining transfer prices – based on costs and based on market prices. It has been established that the formation of internal prices between interdependent entities based on market mechanisms gives worse results for the parent company in the chain than at prices equal to costs. The results of the study indicate the need to adjust prices to achieve the planned targets, for example, the output of the parent company.

Since transfer prices have an impact on profits, firms in the chain should optimize the internal pricing mechanism to increase operational efficiency while maintaining a balance between tax benefits and risks. The results of the study contribute to understanding the motives of firms to choose different transfer pricing methods.

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