Our approach to transfer pricing

Transfer pricing (TP) refers to the setting of prices for goods and services sold between related entities within a group.

Shell applies the internationally recognised arm’s length principle where profits from the sale of goods or services are allocated to the countries where the relevant economic activity takes place and cannot be artificially taken somewhere else. The arm’s length principle ensures that individual group members are taxed on their transactions with each other just as if they were comparable independent enterprises operating in open markets.

Shell also follows the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD TP guidelines), as incorporated in applicable local tax laws. The guidelines outline transfer pricing methods that can be used to apply the arm’s length principle in practice. These methods are applied consistently across the Group.

Shell has a structured approach to transfer pricing accountabilities and responsibilities. The responsibility for transfer pricing matters lies with Shell’s Global TP Team and Finance Operations (FO) TP Team. The Global TP Team provides support to Shell businesses, supports any engagement with tax authorities and provides guidance for projects. The FO TP Team focuses on compliance, including the preparation of documents according to OECD recommendations and country regulations.