The issue of transfer pricing has become in recent years the pride and joy of the tax authorities and a challenge for groups. Intensified activities of the OECD - the program BEPS and update TPG, in conjunction with the legislative activity of local tax authorities, generates the need for in-depth analysis of the seemingly well-known concepts and mechanisms, especially in the area of valuation.

Let's look at the process of valuation business unit in terms of new innovative activity. In fact, it amounts to generate the view that currently has the author of valuation, for a stream of potential future rewards incidental to ownership of the business unit and the associated portfolio of intangible assets.

Let us assume that the author of this valuation is preparing objectively valuation report and the result of his work does not support any of the parties to the transaction (eg .: as an expert witness). This will be the evaluation of scenarios of future events that are currently perceived expert. When this perception will change as a result of changes in the conditions of information, it consistently change the result of the measurement, eg .: the next day.

We must therefore distinguish between the two concepts well, "price" - that occurs in the context of determining the financial terms of the transaction and the hypothetical "value" - that occurs in the context of the valuation and determined according to the accepted standard of value.

The valuation of any business unit eg using the DCF method (method of capitalization of future cash flows) does not have a significant association with the process of determining the transaction price of the business unit in a particular market transaction and usually does not. The price depends on many factors that are difficult to take into account in the valuation process, such as: negotiation skills, momentum (the time factor), difficult to quantify synergies, and other emotional factors.

The share prices of public companies are a good example. The so-called intrinsic value of the equity instruments is differently perceived by well-known experts, who often differ by more than 50%. The market price is almost always different from the results of the valuation, and not just for short periods of time but also in the long term, especially under conditions of high volatility events and a significant level of uncertainty.

Determining reasonable prices in internal transactions is carried out in the field governed by the requirements of TPG, now enriched with solutions BEPS (Base Erosion and Profit Shifting). Perhaps it would be appropriate to involve game theory for determining transaction prices in a way that meets the Arms Length Principle?