CONCEPTUALIZATION OF TRANSFER PRICING AS A MULTIFUNCTIONAL FINANCIAL MANAGEMENT TOOL FOR COMPLEXLY ORGANIZED AND INTEGRATED BUSINESS STRUCTURES

Abstract

Introduction. The processes of economic globalization, external and internal commercial specialization and cooperation have significantly affected the national economy, causing the intensive development of enterprises with complex management organization and business associations. The business units that make up these business structures interact with each other through internal transactions, which is impossible without an effective transfer pricing system. Establishing optimal transfer prices allows for the rational allocation of limited resources and ensures coordination of efforts between affiliated companies (decentralized units) to achieve common strategic goals. However, the potential of using transfer pricing to manage various aspects and areas of financial activity at the micro level has not been sufficiently explored to date. The purpose of the article is to systematize and deepen the conceptual foundations of transfer pricing as a financial management tool for complexly organized and integrated business structures. Results. The article uses the method of verbal and discursive reasoning to substantiate that the basic goals of transfer pricing as a management tool are largely correlated with the strategic goal of financial management – increasing the market value of business entities and the welfare of their owners. The author elaborates on the mechanism of using transfer pricing to maximize profits from the sales of products of integrated business structures by manipulating the financial flows of affiliated companies and increasing profit after the taxation through legal tax optimization schemes. The article identifies the main tax risks generated by transfer pricing at the micro level and outlines ways to minimize them. The author highlights the possibilities of using transfer prices in managing financial risks by concentrating financial results in regions (countries) with high macroeconomic, financial and currency stability, as well as in providing empirical data for operational financial control, financial performance assessment, financial forecasting and planning (budgeting) at all hierarchical levels through the introduction of effective management and financial accounting and document flow. Conclusions. Transfer pricing is characterized by the versatility of its application in the financial management of enterprises with a complex structure and business associations, which is manifested in the rational distribution of income and expenses, maximization of gross and net profit, reduction of financial and tax risks, and formation of a relevant information base for financial management purposes. Further research in this area should be focused on the development of scientific and methodological approaches and applied recommendations for the effective practical implementation of transfer pricing functions as an important means of managing financial processes and relations of the mentioned types of business entities.