Course on Transfer Pricing Retains its Value
Students Say Specialized Economics Class Has Given Them an Edge on the Job
April 13, 2009
A graduate course in the School of Economic, Political and Policy Sciences is paying big dividends for its alumni. Dr. Barry Seldon, a professor of economics, teaches one of the only courses in the country on the economics of transfer pricing.
Transfer pricing assigns a value to goods, services, credit or intellectual property transferred between divisions of the same company or between affiliated firms. As Seldon explains, money does not need to be exchanged within the same company for these goods and services, but they must be valued for tax purposes when traded across different tax jurisdictions.
“Transfer pricing will continue to become increasingly important because of the international nature of business and companies with global operations,” said Seldon. “According to a 2008 KPMG report, the number of countries that have imposed transfer pricing regulations has approximately quadrupled from 1995 to 2007.”
Seldon has been teaching the course since 2002. It was originally offered as a special-topics class for master’s and doctoral students, but the interest was so high the course was expanded to become a regular graduate course. There are also plans to initiate an undergraduate version to prepare bachelor’s students for employment opportunities.
An understanding of transfer pricing makes a student very marketable to employers. Most employees have to learn transfer pricing methods on the job, so Seldon’s students are at a huge advantage. His students have placed at all four of the major accounting firms Deloitte & Touche, Ernst & Young, PricewaterhouseCoopers and KPMG.
“The transfer pricing course has helped me immensely,” said Dr. Shilpi Bihari, one of Seldon’s former students and a senior associate of economic and valuation services at KPMG. “In all my interviews with the Big 4 consulting firms, the interviewers were highly impressed that I had taken a class in transfer pricing. It gave me a competitive edge over the other interview candidates who had no prior knowledge of the topic.”
Bihari, who earned her Ph.D. in economics from UT Dallas in 2007, uses transfer-pricing skills regularly in her work at KPMG. She enthusiastically recommends the course to current economics students.
“Each company with international transactions is required to submit transfer pricing documentation to the tax authority with an analysis of whether the transfer pricing is equivalent to the price charged between unrelated parties. My job, as a transfer pricing specialist, is to prepare such documentation for our clients,” Bihari said.
Seldon plans to continue to teach the course.
“In the early 1990s one-third of US firms’ international trade was intra-firm trade, and this grew to 40 percent by 1997,” he said. “The need for well-trained transfer pricing specialists will only increase, as will the need for academics prepared to teach the subject.”