Transfer Pricing refers to the pricing of goods, services and intangibles between associated parties.
Associated parties; also known as 【related-party transactions】 occur when transactions are being carried out between two parties who are joined by a pre-existing business relationship or common interest, including transactions between the parent company and its subsidiaries.
In other words, either party control one another, or who are under the common control of another party, whether directly or indirectly. They include branches and head offices.
All related party transactions ("Controlled transactions") are required to be conducted at arm's length prices,
e.g:
🙅♂️ Transfer price should not differ much from the market price.
🙅♂️ Thus, you are obliged to prove that there aren't any price gap when transactions were being made between related party.