THE IMPACT OF TRANSFER PRICING ON THE OPTIMIZATION OF THE FINANCIAL AND TAX POSITIONS OF RELATED ENTITIES IN THE REPUBLIC OF SRPSKA

Ljiljana Ž. Tanasić¹, Srđan M. Lalić1, Željana Jovičić² and Teodor M. Petrović¹

¹ University of East Sarajevo, Faculty of Economics Brčko, Brčko District BiH
² University of Banja Luka, Faculty of Economics, Banja Luka, the Republic of Srpska

This paper investigates transfer pricing as a strategic tool for optimizing business performance and reducing the tax burden of related entities in the Republic of Srpska. The goal of the research is to quantitatively assess the impact of transfer pricing on the achievement of the key business goals, including the improvement of financial performance, the minimization of tax burden and the strategic allocation of resources. The empirical data for the research were collected from the Register of Financial Statements for the year 2023. A simple linear regression model was used to determine the relationship between the application of transfer prices and the financial and tax position of related entities. Research findings show a significant and positive impact of transfer pricing on improving the financial and tax position of related entities, especially those operating in multiple tax jurisdictions. The results emphasize the importance of transfer prices as a strategic instrument for financial planning and the optimization of resources and recommend that the national regulatory framework should be harmonized with international guidelines.

Keywords: transfer pricing, related entities, financial position, tax position

JEL Classification: M41, M48, H25, F23

Economic Horizons, 2025, 27(1), 159-175. Published online April 8^th 2025

doi:10.5937/ekonhor2502169T

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