but formally undefined in regulatory legal acts. Thirdly, there may be the situation when this principle is not expressed in the legislation, but related legal doctrines are applied. Fourth, some states do not legally enshrine the principle under consideration in law, but at the same time they empower tax authorities to adjust the income (profit) of taxpayers in order to display it correctly [8].

The development of TNC as a form of organizing production relations caused a certain transformation of the “transfer price” concept. The concept of “transfer price” is increasingly used to denote the price at which goods and services are transferred between economic entities that are a part of a certain TNC. Thus, the concept of “transfer price” covers international market relations [9].

TP is stipulated by the expansion of TNC international operations. In practice, it is related to pricing goods, services, know-how and intellectual property that are transferred across borders within corporate networks. The prices such assets are transferred at determine the income of both parties and, thus, the tax base of the relevant countries. Theoretically, if the calculated transfer price provides a reasonable distribution of income, the tax authorities of both countries receive a fair share of tax revenues. However, any TNC may want to take advantage of various levels of taxation and “pump over” its income into the country with a lower level of taxation.

It is reasonable to consider the essence of TP in the context of economic interests of various subjects of this process. Depending on their role in this process, these subjects are international and national companies, as well as government bodies.

As a result of applying the TP system, companies can get considerable benefits and meet their own economic interests that are not only related to the increase in income, but are more complex.

In general, the main reasons for the companies participating in TP include the following:

1) Optimization of activities: tax optimization (reduction of the tax burden) and efficient distribution and allocation of assets,

2) Control over supply and demand within the company,

3) Keeping trade secrets when transferring technologies within the company,

4) Improving the company competitiveness in target markets,

5) Improvement of the company’s consolidated financial result, in particular, the efficient use of transfer prices subject to applying international accounting standards, and

6) Efficient placement of investments and credit resources.

State bodies have the following motives related to TP:

1) Increase in budget revenues by regulating TP,

2) Protection of national producers,

3) Creating the same competitive conditions for companies in the national market, and

4) Avoidance of maladjustments in the payment balance, which may affect the country’s economy, exchange rate, etc.

Based on the concept of TP, this mechanism is referred to the prices at which transactions are concluded between the legal entities that are members of one international corporation. This has an impact on selecting the jurisdiction for income taxation [10].

At the same time, transfer prices can be classified into three groups: 1) the ones corresponding to the market prices, 2) the ones that are higher than market prices, and 3) the ones that are lower than market prices (the last two cases will be accepted as the manipulation of transfer prices). Market prices may differ under the impact of two factors — objective (the lack or difficulty in obtaining information about market prices for certain types of goods, works, and services) and subjective (obtaining additional economic benefits, including as a result of “tax planning”). According to the authors, the manipulation of prices in TP can be the difference in the transfer price from the market one for the relevant goods, works, and services arising under the impact of a subjective factor (obtaining economic benefits).

The analysis of using the TP system in international markets makes it possible to define the following main features:

1) Principles of applying transfer pricing in various international companies differ. They can be based either on the market ones, exceed, or be lower than the market ones for various parties and transactions. Consequently, it does not go about unequivocal overestimation or undervaluation of market prices, but rather about the adjustment of prices to a certain business transaction in order to solve specifically set managerial tasks.

2) The scope of activity of PT extends to companies of all industries and areas — manufacturing, trade and intermediary sector, financial and credit, insurance business and other industries.

3) Use of TP is an efficient instrument for achieving key strategic goals of organizations and groups of companies.

4) Transfer prices can be applied to those types of goods, finished products, works, and services that actually are an intermediate product, or appear as a part of the final product (goods, work, and services) production, etc.

Improper use of transfer prices can cause the removal of weak competitors, barriers for new competitors to enter the market, and the monopolization of certain markets. In this regard, international organizations, home countries and countries that accept foreign direct investments of TNC implement certain mechanisms to control and regulate TP.

TP is regulated at the interstate level in accordance with international requirements set by the OECD TP Guidelines [7]. Most developed as well as developing countries implement OECD principles into their national TP control and regulation systems. It is necessary to note that non-OECD countries are also recommended to follow the Directives. To publicize them, multilateral seminars are held. Here problems of TP are discussed, and the Directives provisions are explained to representatives of tax administrations. The United States do not participate in these events, because their TP regulation system is much older (it is believed that the first regulatory legal act of the United States related to the TP regulation was introduced as early as in 1928 under Section 45 of the Tax Act adopted by the US Congress). That is why other countries either use the US experience or are guided by the OECD principles, although there are also combined variants. Both systems (OECD and USA) are very similar to each other. In particular, both are based on the market price principle and have similar TP methods. However, in the USA the mechanisms for the practical application of regulation standards and provisions are much