Abstract:

The prices that multinational companies set in transferring assets among their subsidiaries could change the amount of tax debts that they would pay. Therefore the selection of the method that would be used in setting the prices becomes important. One of the methods which are mostly chosen by multinational companies and which are approved by taxation authorities is the cost plus method. The selection of the cost plus method in setting transfer prices raises the importance of the activity based costing method which gives more sensitive and accurate information in the distribution of costs. In this paper how the transfer costs of products which are produced in various regions is calculated according to the traditional and activity based costing methods is explained. Moreover, the impacts of the traditional and activity based costing methods on tax debts that occurred as a result of transfer pricing is shown by using a sample.

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