Oh, boy, this Grauniad investigation is indeed fun:
International companies based in the UK may have hundreds of subsidiary companies, which many use to take advantage of differing tax regimes as they move goods, services and intellectual property around the world. It is estimated that more than half of world trade consists of such movements (known as transfer-pricing) within corporations.
No you innumerate little twats.
Some half of global trade is indeed estimated to be intra-company trade. Dell\’s motherboards (to take an example which I have no idea is true or not) are shipped from China to Ireland where they are assembled into a computer and then shipped to Dell\’s UK subsidiary for sale to me sitting in London. Dell owns the plant in China, the one in Ireland and the mail order place in the UK.
That\’s intra-company trade and as I say, on some estimates it\’s half of world trade.
Transfer-pricing is something rather different. OK, at each stage of this process there will indeed be an intra-company price at which the goods are transferred. Transfer-pricing however normally refers to people manipulating those prices to take advantage of tax rules. You see the difference? With global companies and dispersed production, intra-company trade is inevitable. But whether they\’re using transfer-pricing (in the meaning of being naughty about it) is another matter.