In international trade, transfer pricing is a common tax optimization strategy for multinational companies. By properly adjusting the transaction prices between related companies, it is possible to optimize the tax burden. Here are some key steps and considerations: 1. **Understand the regulations**: Different countries have different regulations on transfer pricing, so it is necessary to have a deep understanding of the laws and regulations of the relevant jurisdictions. Transfer pricing should comply with the "arm's length principle", that is, the transaction price between related companies should be the same as the market price between unrelated companies. 2. **Develop a transfer pricing strategy**: - **Functional analysis**: Analyze the functions, assets and risk-taking of each related company in the transaction, and reasonably allocate profits. - **Comparability analysis**: Select suitable comparable companies or transactions to ensure that the prices of internal or external transactions are similar. - **Select pricing methods**: Common methods include comparable uncontrolled price method (CUP), resale price method (Resale Price Method), cost plus method (Cost Plus Method), transactional net profit method (TNMM), etc. 3. **Document preparation**: Prepare sufficient transfer pricing documents in accordance with the laws of each country to prove the reasonableness of the transaction price. This usually includes transfer pricing reports, functional and risk analysis, market research, etc. 4. **Take advantage of tax havens**: Rationally formulate supply chain and pricing strategies to transfer part of the profits to low-tax areas, but pay attention to compliance and substance. 5. **Regular review and adjustment**: Due to market changes and regulatory updates, transfer pricing strategies need to be reviewed and adjusted regularly to ensure continuous compliance and tax optimization. 6. **Costs and risks**: Although price transfer can achieve tax optimization, improper operation may lead to legal risks and reputation damage. For example, tax authorities may question and adjust non-market transaction prices, resulting in additional tax burdens and fines. 7. **Legal compliance and tax planning**: It is recommended to consult tax advisors or legal experts when designing and implementing transfer pricing strategies to ensure the compliance and effectiveness of the policy. It should be noted that price transfer is a legal tax planning tool, but its use must strictly abide by the legal bottom line to ensure the fairness and compliance of transactions.