This paper provides an overview of transfer pricing as an increasingly key issue in international business and trade and examines the topic from both micro (firm level) and macro (economy wide) perspectives. Transfer prices are valuations of products within a firm and represent a common and important instrument of managerial accounting, financial accounting, and taxation.On a micro level, how transfer pricing decisions are made within a firm is examined via a case study in Croatian company, highlighting the difficulty in solving the corporate transfer pricing problem. The task for company manager was to express his opinion on the transfer pric-ing models used in their company. On a macro level, recent literature is reviewed that demonstrates the impact that transfer pricing has on the larger economy. Practical experience shows that different transfer pricing methods may provide for different results. For this reason a thorough understanding of the different methods is essential for successful planning and documentation of transfer prices among MNEs.Not every transfer pricing method can be applied to each business transaction. The applicability of a transfer pricing method depends on the characteristics of property or services, functions performed, risks borne, contractual terms, economic circumstances and business and business strategies.