Intercompany is over 60% of World Trade


As Intercompany is the area I focus on in my work in Oracle Financials Developemt, I was interested to see a comment in an article in The Guardian (UK Newspaper) which stated:

“Over 60% of international trade now takes place between subsidiaries within transnational groups, according to the OECD.”

Maybe that is why I feel so busy all the time!

The article is coming from a particular political point of view, which you may or may not subscribe to but regardless of that aspect, it does a nice job of highlighting the complex financial implications of a multinational selling bananas. It also makes reference to some of the problems companies have had when the tax authorities deemed they had not paid enough tax, this is the very reason it is important to track carefully the intercompany transactions and transfer pricing – the tax authorities will want to keep a very close eye on it and the consequences of getting wrong can be serious (ie. expensive).