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What Related Business Entities Need to Know About Transfer Pricing Before Crossing Borders

ARTICLE | May 28, 2026

Authored by Vasquez + Company

When businesses expand across state or national borders using related entities, how they price transactions between those entities matters more than many realize. Transfer pricing governs how related companies, such as a parent and subsidiary or brother-sister entities, set prices for intercompany sales of goods, services, and intellectual property. Get it wrong, and your business could face a tax audit, significant back taxes, and penalties of up to 40% of any underpayment. In today's global economy, transfer pricing is no longer just a concern for large multinationals. Small and midsize businesses face the same scrutiny, and proactive compliance is key.

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Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.  

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