Transfer Pricing and Strategic Taxation of Globally Joint Inputs
AbstractThis paper models strategic taxation policy of home and host governments when a multinational enterprise sets transfer prices on globally joint inputs such as research and development. Tax credit and deduction allowances, as well as no taxation of foreign-earned profits, result in identical optimal transfer-price solutions and national income effects in both countries. An equilibrium home-tax solution is to tax foreign-earned profits at a higher rate than domestically earned profits. The multinational responds by shifting profits abroad through transfer-pricing mechanisms. Copyright 1996 by Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 4 (1996)
Issue (Month): 2 (June)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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- Konan, Denise Eby, 2000.
"The Vertical Multinational Enterprise and International Trade,"
Review of International Economics,
Wiley Blackwell, vol. 8(1), pages 113-25, February.
- Denise Eby Konan, 1996. "The Vertical Multinational Enterprise and International Trade," Working Papers 199601, University of Hawaii at Manoa, Department of Economics.
- Hans Jarle Kind & Helene Midelfart & Guttorm Schjelderup, 2004.
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1241, CESifo Group Munich.
- Kind, Hans Jarle & Midelfart, Karen Helene & Schjelderup, Guttorm, 2005. "Corporate tax systems, multinational enterprises, and economic integration," Journal of International Economics, Elsevier, vol. 65(2), pages 507-521, March.
- Guttorm Schjelderup, 1999. "Multinationals, Intra-Firm Trade and the Taxation of Foreign-Source Income," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 6(1), pages 93-105.
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