Global regulation

No one group has the authority to establish international transfer pricing standards of taxation because each country establishes rules for companies operating within its boundaries.However, many factors are now causing greater interest in the establishment of international standards for taxing inter-company transactions.For example, the United States, Canada, Germany and the United Kingdom require transfer prices to be “arm’s length”(that is, the price that would be used if the two companies were unrelated).Although growth in international transactions between related companies has led to a need for international standards, there is still no agreement on what constitutes an “arm’s length” price.