Brandeis University
INTERNATIONAL BUSINESS SCHOOL
FIN 247a – Transfer Pricing Theory and Practice
Thursday – 6:30 pm to 9:30 pm
Fall 2015
Instructor: Dr. Shanto Ghosh
Office: TBD
Email: shghosh@brandeis.edu
Phone: (781) 736 - xxxx
Office Hours: TBA.
Teaching Assistants:
TBA
Prerequisites:
ECON 207a, FIN 202a, and either FIN 213a or FIN 214a.
Course objectives:
Transfer pricing refers to a “price setting” exercise adopted by multinational enterprises
(MNE’s). For example, if a subsidiary company sells goods to a parent company, the cost of
those goods is the transfer price. It can be used as a profit allocation method to attribute a
multinational corporation's net profit (or loss) before tax to countries where it does business.
Transfer pricing results in the setting of prices among divisions within an enterprise.
Given the extent of globalization in the current business environment, MNE’s have to cope with
transfer pricing issues on a day to day basis. An increasing number of countries across the globe
are announcing transfer pricing legislation to claim their “fair” share of profits from the MNE’s
global income. As a result, this field has attracted significant attention from policy makers,
businesses and consulting companies. This course will introduce the students to the economics of
transfer pricing and draw upon their multi-disciplinary training across accounting, economics,
and finance and apply them to the theory and practice of transfer pricing.
Learning goals and outcomes:
- Understand multinational intercompany pricing from an operational and tax perspective
- Understand application of financial accounting concepts in transfer pricing
- Understand application of financial valuation concepts in transfer pricing
- Understand core elements of tax planning in a multinational organization
- Understand the relevant elements of legal contracting and tax reporting in a transfer pricing
context
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Method of Instruction:
Instruction will be a combination of lectures, case studies, problem solving, and group projects.
This course is very practical and will train the students to learn and apply fundamental concepts
from economics and finance to the field of transfer pricing. Problem solving and case studies are
very important in this course and class participation is very strongly encouraged from all my
students throughout the term. You should read all assigned material (regulatory framework, book
chapters, case studies etc.) since they will help you imbibe the concepts in a meaningful way.
Course materials
A course pack with relevant readings from the following books (and sources) will be made
available for this class. Students could also buy the books directly if they so desire.

Transfer Pricing and Corporate Taxation: Problems, Practical Implications and Proposed
Solutions, by Elizabeth King

Global Transfer Pricing: Principles and Practice: Second Edition, by John Henshall

U.S. Treasury Regulations, Section 482

OECD Transfer Pricing Guidelines for Multinational Enterprises
The lecture notes and other materials that I will post on LATTE are equally important as the
required text.
In addition, I will provide references to some concepts (used from the field of economics or
finance) to help sharpen your understanding of the lectures
Cases and Additional Readings: Will be either handed out in class or electronically distributed
via LATTE or email.
Homework Problem Sets: There will be no homework’s in this course other than the case
studies and pre-reading materials for in-class discussions.
Case Studies:
The case studies will be group assignments that can be completed in groups of no more than
three people in your section. Written case study assignments are due at the start of the class.
Late assignments will not be accepted.
There will be three in-depth case studies that you will need to complete. The format of each will
be different and the submission requirement of each will be specified along with the case study.
Grading and Student Evaluation:
The final grade will be determined according to the following components:
Case Study Discussions and Assignments 30%
Mid-term examination
30%
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Final Exam
Total
40%
100%
Class Contribution: Contribution is an essential component in the overall education experience.
Contribution takes many forms: asking informed questions in class, handing in solved problem
sets, contributing actively to group projects, making intelligent comments, reading the assigned
cases and being prepared to discuss the issues, actively listening to your peers and working with
others. Please remember that quantity is no substitute for quality. There will be ample
opportunity to contribute to the class. It is your responsibility to ensure that you take an
active role in the class. If this is a problem for you, I urge you to talk to me to discuss ways
you can make a contribution.
Assignments and Exams: Apart from the three case studies, there will be a mid-term and a final
examination. Both the mid-term and the final exam will be a 3 hour exam each. The final exam
is comprehensive and cumulative. There will be no makeup exams or assignments for this
course, except only under extraordinary circumstances.
My exams are not open book or open notes. However, you may bring two crib sheets to the final
exam. A crib sheet is an ordinary (A4) piece of paper, 8-1/2"x 11", on which you may write,
type, print, or copy formulas ONLY- no definitions or any other text will be allowed. You may
use both sides of the sheets. You may not staple or tape any extensions or booklets onto the crib
sheet. Do not abuse this privilege – if you do this will constitute cheating and appropriate
penalties as described under academic integrity will be imposed.
Use of Laptop Computers and Cell Phones in Class:
Cell phones and PDA.s (i.e., Blackberry.s, I Phones, etc.) must be turned off during lectures.
Laptops may be used but ONLY to browse the lecture slides or take notes. Regular class
attendance is mandatory and strongly advised if you want to do well in the course. I stick quite
closely to my slides and what I discuss in class when setting exam questions. Laptop computers
and cell phones may not be used during exams.
Disabilities:
If you are a student with a documented disability on record at Brandeis University and wish to
have a reasonable accommodation made for you in this class, please see me immediately.
Academic Integrity:
The instructor enforces all University rules, especially those regarding academic honesty and
integrity. Note: there is a zero tolerance level in this area. Plagiarism is cheating. The use of
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another’s material without permission and without recognition is cheating. This applies to text
books, solution manuals, study guides, a friend's assignment, past assignments, internet resources
or any other material irrespective of the source. You are expected to be honest in all of your
academic work. Please consult Brandeis University Rights and Responsibilities for all policies
and procedures related to academic integrity. Students may be required to submit work to
TurnItIn.com software to verify originality. Allegations of alleged academic dishonesty will be
forwarded to the Director of Academic Integrity. Sanctions for academic dishonesty can include
failing grades and/or suspension from the university. Citation and research assistance can be
found at LTS - Library guides
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Class Schedule
Lecture 1
Lecture 2
Lecture 3
Transfer Pricing and
Global Business
Transfer pricing - impact on MNE's (from an
economics concept to the world of taxation)
Role of Taxes and Business Strategy
An empirical analysis of pricing behavior by
MNE's
Why is it important - relevance for the CXO
suite
Transfer Pricing by U.S.-Based Multinational Firms,
Bernard-Jensen-Schott, August 2006 (Tuck School of
Business Working Paper)
Taxes and Business Strategy, Chapter 1, ( Myron S.
Scholes, Mark A. Wolfson, Merle Erickson,
Michelle Hanlon, Edward Maydew, Terry Shevlin)
Key Concepts in Transfer
Pricing (1)
The Arm's Length Standard (and other
alternatives)
Introduction to the US 482 regulations
Introduction to the OECD Guidelines
Recent developments in the field
international taxation and transfer pricing
Section 482 regulations, Section 1 and OECD
Guidelines Chapter 1
Key Concepts in Transfer
Pricing (2)
Importance of Functions, Assets and Risks in
transfer pricing
Discussion of the available transfer pricing
methods to determine "arm's length"
behavior
Section 482 regulations, Section 1 and OECD
Guidelines Chapter 2
Transfer Pricing and Corporate Taxation: Problems,
Practical Implications and Proposed Solutions,
Chapter 2
CASE STUDY ONE (due beginning of Lecture 5)
Lecture 4
Key Concepts in Transfer
Pricing (3)
Supply, Demand and the Role of Markets in
Setting Transfer Prices
Legal Contracts and their importance in
transfer pricing analysis
Section 482 regulations, section 2 and 3 and OECD
Guidelines Chapter 3
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Lecture 5
Lecture 6
Comparable Analysis
A recap of key financial accounting concepts
and their relevance to transfer pricing
issues
Reading financial statements for transfer
pricing analysis
Working with company financials introduction to Compustat data
Transfer Pricing and Corporate Taxation: Problems,
Practical Implications and Proposed Solutions,
Chapter 3
Case Study - Applying the
ALS in real life
Application from a US industry that will
focus on students interpreting facts, and
applying the available methods to
determine an arm's length priceApplication
of regression analysis in transfer pricing
Transfer Pricing and Corporate Taxation: Problems,
Practical Implications and Proposed Solutions,
Chapter 5
MIDTERM EXAMINATION
Lecture 7
Lecture 8
Transfer Pricing for
Intangibles (1)
The CUT method and analysis of "royalty
rates"
Application of corporate finance concepts
to transfer pricing
Section 482 regulations section 4 and OECD
Guidelines Chapter 6
Transfer Pricing for
Intangibles (2)
Income Method and DCF analysis determining risk and discount rates for
transfer pricing analysis
Analysis of "valuing" an intangible in a
transfer pricing context
Section 482 regulations, Section 7 and OECD
Guidelines recent discussion drafts on intangibles
Transfer Pricing and Corporate Taxation: Problems,
Practical Implications and Proposed Solutions,
Chapter 12
CASE STUDY TWO (due beginning of Lecture 10)
Lecture 9
Introduction to pricing
intercompany financial
transaction
Intercompany debt pricing
Intercompany guarantee pricing
Transfer Pricing and Corporate Taxation: Problems,
Practical Implications and Proposed Solutions,
Chapter 7
Cited papers
Lecture
10
International tax and
transfer pricing
Key concepts in international tax
Interplay of international tax and transfer
pricing
Lecture Notes
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CASE STUDY THREE (due beginning of Lecture 12)
Lecture
11
Law, economics and
transfer pricing
Relevance of legal contracts in transfer
pricing
Legal versus economic substance understanding the nuances
Lecture Notes
Lecture
12
Recent developments –
BEPS
Base Erosion and Profit Shifting
OECD Publications
Lecture
13
Recap of key concepts in
transfer pricing
applications
FINAL EXAMINATION
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