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Transfer Pricing - An Innovative Approach

Author

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  • Ramona MAXIM

    (University Dunarea de Jos, Galati, Romania)

  • Florentina MOISESCU

    (University Dunarea de Jos, Galati, Romania)

Abstract

This paper presents transfer pricing and elements of drafting the transfer pricing file by the big companies. The transfer pricing procedure was founded based upon Order no. 442/2016 and the Fiscal Procedure Code and it represents a method upon which the tax base is transferred from a high tax country to a country with low taxation. This legislation outlines the conditions which companies must observe in order to draft the transfer pricing documentation and the significance thresholds. The purpose to draft a transfer pricing file is to reduce the differences between prices and market value and the actual results of company taxation. Economic double taxation occurs when tax authorities apply price adjustments because the company did not respect the principle of market value. Keeping records of transfer pricing and practicing a price aligned to market requirements contribute to an understanding of business development and the creation of appropriate tax planning. Taking into account all these aspects and the fact that any taxpayer is tempted to pay the lowest possible fees, tax havens become an option. In this context we can speak of a tax haven as a loophole in the use of the market price.

Suggested Citation

  • Ramona MAXIM & Florentina MOISESCU, 2017. "Transfer Pricing - An Innovative Approach," Proceedings RCE 2017, Editura Lumen, vol. 0, pages 415-422, November.
    • Handle: RePEc:lum:progal:v::y:2017:i::p:415-422
    DOI: https://doi.org/10.18662/lumproc.rce2017.1.36
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    References listed on IDEAS

    as
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    2. Bartelsman, Eric J. & Beetsma, Roel M. W. J., 2003. "Why pay more? Corporate tax avoidance through transfer pricing in OECD countries," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2225-2252, September.
    3. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
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    More about this item

    Keywords

    transfer price; double taxation; market value. Title of Book: Risk in Contemporary Economy;
    All these keywords.

    JEL classification:

    • A23 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Graduate

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