ABSTRACT
This chapter examines transfer price, which operates as an instrument for the distribution of costs and profits between different units and does not represent real market prices. It shows how Russian companies transfer a firm's profit to the Russian region with extraordinary conditions for business. The chapter investigates how national transfer pricing generates profit centers in regions, and how the distribution of revenue among diverse regions influences the sustainable development of territories. It discusses the use of tolling for affiliate structures and the effect that tolling gives the affiliates is redistribution from the supplier to the processor obtained during the processing profit. A firm's profit can be transferred to a region that offers special conditions for business, such as internal offshore zones and special economic zones (SEZ), which permits the firm to use reduced corporate tax rate. Often these zones can permit supplementary acceptable expenses against income as higher depreciation rates and carrying forward of business losses of the company.
