Buzzword: Transfer pricing

Marketplace Staff Sep 15, 2006

The biggest tax settlement in U.S. history brings us this week’s Marketplace Money buzzword: transfer pricing.

Transfer pricing is a practice many multi-national corporations use to cook their books.

One example is attributing corporate profits to a subsidiary in a country with low taxes. This week the IRS ordered drug company Glaxo Smith Kline to pay $3.4 billion for doing just that.

The company could probably use a dose of its Zantac heartburn medicine.

If you’re feeling bad for them, don’t worry. A company spokesman claims Glaxo could have paid another $12 billion had it lost in court.

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