Tranfer pricing through electronic commerce

With the process of globalization, the spread of multinational companies operating in more than one country has led these companies to utilize various tools to achieve their main goal of profit maximization by minimizing the taxes they pay as a result of their business transactions. The most common of these tools is transfer pricing. On the other hand, the concept that facilitates fixing transfer pricing and which has increased in importance with the development of information communication technologies is the electronic commerce. With the widespread use of electronic commerce, the possibility of hiding assets subject to trade has increased, the concepts of place and time have become ambiguous, and conducting asset and risk analysis – the function that plays an important role in determining transfer pricing – has become difficult. In this study, revealing the role of electronic commerce in transfer pricing manipulations is intended. Based on the stated purpose, firstly the concepts of electronic commerce and transfer pricing were mentioned in brief. Furthermore, information was given about the use of electronic commerce in transfer pricing manipulations, the estimated size of taxation losses, and the detection and prevention of such manipulations. In conclusion, studies of some selected countries on this topic, OECD countries being in the first place, geared towards fixing transfer pricing through electronic commerce were cited. As a result of the study, it was determined that the development and widespread use of electronic commerce made utilizing transfer pricing quite easier. It was concluded that this situation inconveniences performing the jobs of tax administrations of countries. Therefore, in order to eliminate the negative effects of transfer pricing manipulations, it was suggested that it would be more beneficial to cooperate at an international level rather than countries taking separate measures by themselves unilaterally. Keywords: Globalization, Electronic Commerce, Transfer Pricing