The above is an example of "transfer pricing" or "profit shifting". What's the difference? Transfer pricing is illegal. Profit shifting isn't (within limits; it

The above is an example of "transfer pricing" or "profit shifting". What's the difference? Transfer pricing is illegal. Profit shifting isn't (within limits; it technically has to be "at arm's length" and other requirements) You have it backwards: transfer pricing is legal, profit shifting is not. Transfer pricing is the legal term used to refer to the establishment of prices between related entities pursuant to regulations. The transfer pricing regulations were created to cut down on profit shifting.