TRANSFER PRICING OF TRANSACTIONS BETWEEN RELATED PARTIES AS A RESULT OF GLOBALIZATION

The economic globalization has brought not only benefits, but some negative side effects as well. Globalization has led to the concentration of economic activity within a small number of multinational corporations. These corporations can shift profits among their entities across borders to low-tax countries and tax havens to reduce their pre-tax profits. In order to avoid the tax evasions the rules of transfer pricing are applied. Transfer pricing is a system that tries to protect the domestic tax authority and to prevent international tax evasion. The transfer pricing relates to the transactions realized between related parties which may be influenced by mutual relations of these parties. If the prices applied in the transactions of related parties are not comparable with the prices which shall be used by unrelated parties in comparable transactions, the tax evasions can occur. The transfer pricing is still more discussed issue in the world, as well as in the Slovak Republic, where every year the number of tax controls is growing due to this area. The aim of the paper is to assess the issue of transfer pricing in the conditions of the Slovak Republic. The theoretical research was applied for reaching the aim of the paper. Basic input materials are legal norms except for professional literature, especially OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and Act No. 595/2003 Coll. on Income Tax with the latest amendments.