Multinationals And The Relationship Between Strategic And Tax Transfer Prices
AbstractMultinational enterprises engaging in cross-border, intrafirm trade can use a different price for cost accounting purposes than used for tax accounting purposes. This possibility has not been previously modeled. We study the implications for how both transfer prices are set under separate entity and formula appointment approaches. The relationship between the two prices in the presence of penalties for noncompliance with arm's length pricing is also examined. The results are shown to be robust to alternative market structures and imperfect taxation.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 822.
Length: 26 pages
Date of creation: 2001
Date of revision:
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