The role of multinationals in Romania has increased since 1 January 2007, due to the increased integration of national economies and technological progress, particularly in the area of communications. This type of growth presents complex taxation issues for both tax administrations and multinationas, themselves, since separate country rules for taxation cannot be viewed in isolation, but must be addressed in a broad international context. In order to apply the separate entity approach to intra-group transactions, individual group members must be taxed on the basis that they act at arm’s length in their dealing with each other. In this context, transfer prices are significant for both taxpayers and tax administrations because ther determine in large part the income and expenses, and therefore taxable profit of associated enterprises in different tax jurisdictions.

Multinational enterprise, associated company, transfer prices, arm’s length transaction, tax jurisdiction