Strategic Transfer Pricing: The Art Of Pricing Inter-company Transactions Between Bangladesh And China

International transfer pricing has been a highlighted issue during the last decades as country after country has revised and introduced new transfer pricing laws as a respond to the expanded globalization. Several countries are adopting similar approaches and the prime guiding principles are provided by the Organization for Economic Co-Operation (OECD). The international law as well as the laws of all30member countries is based on the OECD Guidelines.The purpose of this masters’ thesis is to describe differences and similarities regarding the transfer pricing regulations in China and Bangladesh and to explain how a Bangladeshi multinational enterprise (MNE) have to utilize and adjust their transfer pricing strategy when trading with group companies in China. The results then conclude into a step model for strategic transfer pricing.The differences between the regulations are mainly uncovered in the definition of associated parties and associated interest. The differences in the regulations are thus of minor importance and does not affect a Bangladeshi MNE to any major extent. The challenging area is instead the conflict between the tax authority and the customs service. To enable this study, three Bangladeshi MNEs are used as a case study. I discovered that all had very different transfer pricing strategies even though they are within the same industry and two of them even within same range of products. Out of this I made the conclusion that the strategy chosen is not just depending on what product or service you trade with but also the aim and purpose, the range of products and the structure of the company. International transfer pricing is a very complex issue that goes into nearly all business operations. The concept of transfer pricing can thus be broken down and simplified if the demands from the company is minor.