Transfer prices represents an interesting area in economic theory and practice as is their use in the function of moving profit between countries in order to minimize corporate tax. In accordance with above, the subject of this research is transfer prices and their application in business activities of companies. The problem of transfer prices is one of the most complex area of tax theory and practice and their relevance should not be ignored. Transfer prices are identified as one of the greatest challenges in international accounting because their using enable moving profits to the tax havens and minimizing corporate tax and maximizing profit after tax at group level. Authors of this paper processed their issue with special emphasis on the principle of arm’s length and his implementation in Serbia. The subject of paper manifests tax aspects of transfer prices through theoretical foundations and empirical analysis by methods and normative regulation in Republic of Serbia.