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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- Nathan Berg & Chun-Yu Chen & Barry J. Seldon, 2014. "Strategic Transfer Pricing and Intensity of Competition," Working Papers 1403, University of Otago, Department of Economics, revised Mar 2014.
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- Guttorm Schjelderup, 1999. "Multinationals, Intra-Firm Trade and the Taxation of Foreign-Source Income," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 93-105.
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