The term "transfer price" has been used to identify the controls to which commercial or financial transactions carried out between related parties are subject, headquartered in different tax jurisdictions, or when one of the parties is headquartered in a tax haven. Due to the peculiar circumstances existing in the operations carried out between these people, the price practiced in these operations may be artificially stipulated and, consequently, differ from the market price negotiated by independent companies, under similar conditions.
Fiscal control of transfer pricing is imposed due to the need to avoid loss of tax revenue. This reduction is verified in view of the artificial allocation of revenues and expenses in operations with the sale of goods, rights or services, between people located in different tax jurisdictions, when there is a link between them, or even if they are not linked, but provided that one of them is located in a tax haven – country or dependency with favored taxation or whose internal legislation opposes secrecy to the disclosure of information regarding the corporate constitution of legal entities or their ownership.
Several countries have been instituting this control as a measure to safeguard their tax interests, given the finding of price manipulation by interdependent companies in international transactions, with the unequivocal objective of taking advantage of more favorable tax regimes. Thus, there is a transfer of income from one State to others that offer lower rates or grant exemptions, through the manipulation of prices practiced in the export and import of goods, services and rights.