Final answer:
Transfer pricing is the term used for the pricing of transactions between different divisions or entities within the same enterprise, often used for profit allocation and tax minimization.
Step-by-step explanation:
Pricing established for transactions between members of the same enterprise is called transfer pricing. It involves setting the prices for goods, services, or intellectual property when such transactions occur between various divisions, subsidiaries, or affiliated companies under common ownership.
Transfer pricing is used not only for profit allocation but also for tax purposes, as different tax jurisdictions may encourage enterprises to set prices on intra-company transactions to shift profits and minimize their overall tax burden. Handling transfer pricing requires understanding and complying with international guidelines, such as those issued by the OECD, as well as various local regulations.