What is the basic principle of transfer pricing of multinational companies managed by international enterprises? Why is transfer pricing difficult to prevent?

The basic principle is that between the parent company and its subsidiaries, or between subsidiaries, profits can be transferred through artificially set prices, sales, technology transfer or capital lending.

The difficulty of prevention is mainly because there are many ways of this transfer, and many things have no standardized market pricing as a reference.

For example, there is no standard for technology transfer.

For example, it is not easy to control capital lending and equipment leasing by using spreads.