Challenges and Issues in Transfer Pricing : In Specific Context of Advertisement, Marketing and Promotion

Transfer pricing remains an inevitable tool for MNCs to carry out intra-company transactions. From the literature, misuse of transfer pricing has been observed with respect to advertisement, marketing and promotion (AMP). This research paper attempts to demonstrate the instances wherein abuse of transfer pricing was witnessed in transactions dealing with intangibles. Being difficult to measure and because of certain legality issues, transactions involve in AMP have been exploited for tax-evasion purposes. Apart from the concepts, this paper also stresses upon the mechanism through which the process of transfer pricing in MNCs can be smoothened and litigations can be avoided