International Transfer Pricing: Pointers Towards Performance Evaluation of Profit Center Head

Abstract

International Transfer Pricing today is a subject of high discussion amongst multinationals. Research indicates its use for Tax management, strategic purpose as also for management control purpose. The issue is further highlighted by the fact that the international related party transactions are now more than 60% of international trade. This fact brings up serious questions regarding the implementation of the concept of profit center as a type of responsibility center. The paper points towards the diversion from performance evaluation criteria given under the profit center that is profit. This paper finds pointers towards the changes in the performance evaluation criteria other than profit for a profit center head, through extensive literature survey and discussions with industry professionals.

Keywords: Transfer Pricing, Performance Evaluation, Profit Center, International Trade