IDEAS home Printed from https://ideas.repec.org/p/mpi/wpaper/transfer_pricing.html
   My bibliography  Save this paper

Transfer Pricing – Business Incentives, International Taxation and Corporate Law

Author

Listed:
  • Wolfgang Schoen

Abstract

Transfer pricing is relevant in three different contexts: From a managerial perspective, intra-firm transfer prices are employed to set incentives for sub-divisional managers to enhance efficient allocation of resources. From an international tax perspective, transfer pricing rules under the arm's length standard serve as a means to allocate profits to corporate entities within a multinational enterprise and to allocate taxing rights to the involved jurisdictions. From a corporate law perspective, transfer prices within a group are controlled in order to avoid asset diversion by related-party transactions ("tunneling"). This article shows the interaction between these three perspectives. It pleads for a deviation from the arm's length standard: source countries should tax profits derived by local group companies under managerial transfer pricing and additionally tax rents derived by foreign companies from intra-firm intangibles and intra-firm specific investment. Corporate law requirements hardly pre-empt this shift away from the arm's length standard. Finally, this concept is applied to some widely discussed court cases on transfer pricing.

Suggested Citation

  • Wolfgang Schoen, 2011. "Transfer Pricing – Business Incentives, International Taxation and Corporate Law," Working Papers transfer_pricing, Max Planck Institute for Tax Law and Public Finance.
  • Handle: RePEc:mpi:wpaper:transfer_pricing
    as

    Download full text from publisher

    File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/Tax-MPG-RPS-2011-05.pdf
    File Function: Full text (original version)
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cooper, Maggie & Nguyen, Quyen T.K., 2020. "Multinational enterprises and corporate tax planning: A review of literature and suggestions for a future research agenda," International Business Review, Elsevier, vol. 29(3).

    More about this item

    Keywords

    Transfer Pricing; International Taxation; Related Party Transactions; Multinational Enterprises; Corporate Groups; Taxing Rights;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mpi:wpaper:transfer_pricing. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hans Mueller (email available below). General contact details of provider: https://edirc.repec.org/data/mptaxde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.