Transfer pricing in the conditions of the Slovak Republic

University of Zilina, Faculty of Operation and Economics of Transport and Communications, Department of Economics, Univerzitna 1, 010 26 Zilina, Slovakia

^* Corresponding author: anna.kubjatkova@fpedas.uniza.sk

Abstract

Research background: All of the world’s economic relations in today’s world are subject to the process of globalization. Increasingly, the economic activity of many entrepreneurs transcends national borders, often operating in the form of multinational companies. Through the Transfer Pricing Institute, multinational companies can transfer their pre-tax profits from one country to another, and this phenomenon often harms the affected countries, which can result in lower tax revenues and a deterioration in the balance of payments. Transfer pricing generally seeks to prevent similar shifting of profits and thus prevent possible tax evasion.

Purpose of the article: The aim of this article is primarily to summarize the knowledge and procedures of transfer pricing and its importance in the conditions of the Slovak Republic. The article also aims to explain to the general public why transfer pricing is important and necessary for a healthy economy.

Methods: In this work, the methods of induction, deduction, and comparison were used to obtain a true picture of the issue of transfer pricing. Methods of synthesis and analysis of the researched issues were also used.

Findings & Value added: In addition to a general overview of this issue, we consider the result of this work to summarize the legislative framework of transfer pricing and also provide a brief and clear example of the transfer of profits in transfer pricing between two and within one country and their impact on the country’s economy.