scholarly journals Transfer Pricing Rules, OECD Guidelines, and Market Distortions

2014 ◽  
Vol 16 (4) ◽  
pp. 650-680 ◽  
Author(s):  
KRISTIAN BEHRENS ◽  
SUSANA PERALT ◽  
PIERRE M. PICARD
Keyword(s):  
Transfer Pricing ◽  
Pricing Rules

scholarly journals Corporate Income Shifting in an Era of Tax Multilateralism: The Impact of Exchange-of-Information Agreements

2021 ◽  
Vol 69 (2) ◽  
pp. 357-389
Author(s):  
Devan Mescall ◽  
Paul Nielsen
Keyword(s):  
Multinational Corporations ◽  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Empirical Studies ◽  
Annual Reports ◽  
Income Shifting ◽  
Exchange Of Information ◽  
Pricing Rules ◽  
Using Data ◽  
The Impact

Using data from the annual reports of over 100,000 subsidiaries of multinational enterprises (MNEs) from 55 countries between 2003 and 2012, the authors of this article investigate the impact of exchange-of-information agreements ("EOI agreements") on tax-motivated income shifting. Transparency created by the signing of EOI agreements is expected to reduce the tax-motivated shifting of income by multinational corporations. Whether such agreements affect the income-shifting behaviour of multinational corporations is an unanswered question. The authors find evidence that, on average, EOI agreements do have an impact on tax-motivated income shifting. Additionally, they find that more advanced, modern EOI agreements are associated with a larger decrease in tax-motivated income shifting compared to the impact of early EOI agreements. This evidence challenges the prevalent assumption in empirical studies that EOI agreements are homogeneous. Supplemental analyses suggest that factors that affect the information asymmetry between MNEs and tax authorities, such as corporations with high levels of intangibles and tax authorities with strong transfer-pricing rules and enforcement, can diminish or enhance the effectiveness of EOI agreements in moderating tax-motivated income shifting. The evidence provided by this study shows that consideration of the tax authorities' information environment and the substance of an EOI agreement is essential when assessing the impact of such an agreement on the tax behaviour of sophisticated taxpayers such as multinational corporations.

scholarly journals Gray Markets and Multinational Transfer Pricing

2011 ◽  
Vol 87 (2) ◽  
pp. 393-421 ◽  
Author(s):  
Romana L. Autrey ◽  
Francesco Bova
Keyword(s):  
Social Welfare ◽  
Marginal Cost ◽  
Transfer Pricing ◽  
Foreign Market ◽  
Multinational Firm ◽  
Foreign Subsidiary ◽  
Foreign Subsidiaries ◽  
Gray Market ◽  
Pricing Rules ◽  
Transfer Prices

ABSTRACT Gray markets arise when a manufacturer's products are sold outside of its authorized channels, for instance when goods designated by a multinational firm for sale in a foreign market are resold domestically. One method multinationals use to combat gray markets is to increase transfer prices to foreign subsidiaries in order to increase the gray market's cost base. We illustrate that, when a gray market competitor exists, the optimal transfer price to a foreign subsidiary exceeds marginal cost and is decreasing in the competitiveness of the domestic market. However, a multinational's discretion in setting transfer prices may be limited by mandatory arm's length transfer pricing rules. Provided gray markets exist, we characterize when mandating arm's length transfer pricing lowers domestic social welfare relative to unrestricted transfer pricing. We also demonstrate that gray markets can lead to higher domestic tax revenues, even when gray market firms do not pay taxes domestically.

Transfer pricing rules and corporate tax competition

1996 ◽  
Vol 60 (3) ◽  
pp. 401-422 ◽  
Author(s):  
Ramy Elitzur ◽  
Jack Mintz
Keyword(s):  
Tax Competition ◽  
Transfer Pricing ◽  
Corporate Tax ◽  
Pricing Rules

scholarly journals Flaws in taxation of transnational corporations using the transfer-pricing rules

2020 ◽  
pp. 58-63
Author(s):  
Anastasiia Andreevna Iugina
Keyword(s):  
Transfer Pricing ◽  
Transnational Corporations ◽  
Transnational Corporation ◽  
International Taxation ◽  
Lack Of Information ◽  
Pricing Rules ◽  
The Subject ◽  
Definition Of ◽  
Available Information

The subject of this research is the transfer-pricing rules applied in various countries, their peculiarities and flaws from the standpoint of approach to taxation of transnational corporations overall; as well as practical issues of implementation of transfer-pricing rules for transnational corporations and fiscal authorities, namely the problems of avoidance of taxation by the representatives of transnational corporations and ambiguity of the applied approaches towards regulation. The author examines differences in the rules applied by various jurisdictions, as well as law enforcement problems emerging thereof. Relevance of the topic is substantiated by high significance of transfer-pricing rules for taxation of transnational corporations, as well as the need for ensuring universality in international taxation. The main conclusions lie in determination of substantial ambiguity in the transfer-pricing riles, associated with the lack of information on comparable transaction in the available information systems, as well as assessment of rules with regards to each individual situation. The mechanism employed by the Organization for Economic Cooperation, aimed ate elimination of flaws in transfer-pricing rules, such as consensual procedure, are expensive and often ineffective for transnational corporations. Therefore, elimination of dual taxation is achieved only in some situations. Differences of legislation on transfer pricing in various jurisdictions can also lead to dual taxation of transnational corporations. Moreover, the “arm’s length” principle do not allow reflecting synergetic effects that emerge in the context of activity of transnational corporation, and thus, definition of taxation base within the framework of acting transfer-pricing rules is incomplete.

scholarly journals TAX MORALITY: EXAMINING THE BEPS DEBATE, WORK OF THE OECD AND ITS IMPACT ON AFRICA

2017 ◽  
Author(s):  
Daniel Godson Olika
Keyword(s):  
Multinational Corporations ◽  
Transfer Pricing ◽  
Tax Rates ◽  
Profit Shifting ◽  
The Public ◽  
Pricing Rules ◽  
Planning Strategies ◽  
International Tax ◽  
Harsh Criticism ◽  
The Impact

International tax issues have never been at the forefront of international politics as they are today. This is due in large part to the realization that the current international tax system in existence allows multinational corporations to plan their taxes in such a way that they will be able to pay little or no taxes at all. They are able to do this through certain loopholes and gaps that currently exist in the system. These loopholes and gaps are seen as creating opportunities for taxpayers who are involved in cross-border activities to aggressively structure their activities to mitigate potential tax exposure or achieve no tax liabilities. They do this by exploiting; the hybrid-mismatch arrangements, shortcomings of the transfer pricing rules in jurisdictions where they operate and shifting profits from countries where their profits are made to countries with low tax rates. Consequently, some multinationals pay as little as five percent in corporate taxes, even as smaller domestic businesses pay up to 30 percent. The result of this activity is what is known as; base erosion and profit-shifting (BEPS) and it has the potential to deprive all countries of significant tax revenues. This rave debate and harsh criticism from the public influenced the intervention of the Organisation for Economic Co-operation and Development (OECD) to start its now famous BEPS Project. The OECD BEPS Project aims to provide governments or tax administrators with clear international solutions for fighting aggressive corporate tax planning strategies that artificially shift profits to locations where they are subjected to more favourable tax treatment. This paper shall address the various strands of the BEPS debate, the OECD BEPS project, the impact of the project in Africa and Nigeria. The next section shall address the various strands of the debate.

scholarly journals Transfer pricing rules in EU member states

2010 ◽  
Vol 58 (3) ◽  
pp. 243-250 ◽  
Author(s):  
Veronika Solilová
Keyword(s):  
Free Market ◽  
Transfer Pricing ◽  
Transfer Price ◽  
Market Conditions ◽  
Member States ◽  
Tax Havens ◽  
Eu Member States ◽  
Pricing Rules ◽  
Arm’S Length Principle ◽  
Accepted Standard

One of the important area of international taxes is transfer pricing. Transfer price is a price set by a taxpayer when selling to, buying from, or sharing resources with a related (associated) person. The tran­sac­tions between these persons should be assessed at their arm’s length price in according the arm’s length principle – international accepted standard – as the price which would have been agreed between unrelated parties in free market conditions. This paper is focused on the tranfer pricing rules used in particular EU Member States so as if EU Member States apply the arm’s length principle, define the related persons, apply recommendations of the OECD Guidelines, use the transfer pricing methods, require TP Documentation, exercise specific transfer pricing audit or impose specific penalties and apply APAs. Transfer pricing rules should prevent taxpayers from shifting income to related person organized in tax havens or in countries where they enjoy some special tax benefit.

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