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The impact of transfer pricing laws on import mis-pricing – Evidence from Denmark

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  • Knoll, Bodo
  • Kruse-Becher, Sanne
  • Riedel, Nadine

Abstract

Many countries have recently introduced transfer pricing regulations to constrain multinational profit shifting from high-tax to lower-tax affiliates through strategic mis-pricing of intra-firm trade. We rely on rich administrative firm-level trade data for Denmark to show that tighter transfer pricing rules effectively reduce tax-motivated trade mis-pricing.

Suggested Citation

  • Knoll, Bodo & Kruse-Becher, Sanne & Riedel, Nadine, 2023. "The impact of transfer pricing laws on import mis-pricing – Evidence from Denmark," Economics Letters, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523003865
    DOI: 10.1016/j.econlet.2023.111361
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    References listed on IDEAS

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    1. Theresa Lohse & Nadine Riedel, 2013. "Do Transfer Pricing Laws Limit International Income Shifting? Evidence from European Multinationals," CESifo Working Paper Series 4404, CESifo.
    2. Li Liu & Tim Schmidt-Eisenlohr & Dongxian Guo, 2020. "International Transfer Pricing and Tax Avoidance: Evidence from Linked Trade-Tax Statistics in the United Kingdom," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 766-778, October.
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    4. Devan Mescall & Kenneth J. Klassen, 2018. "How Does Transfer Pricing Risk Affect Premiums in Cross‐Border Mergers and Acquisitions?," Contemporary Accounting Research, John Wiley & Sons, vol. 35(2), pages 830-865, June.
    5. Thomas Tørsløv & Ludvig Wier & Gabriel Zucman, 2023. "The Missing Profits of Nations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(3), pages 1499-1534.
    6. Jost H. Heckemeyer & Michael Overesch, 2017. "Multinationals profit response to tax differentials: Effect size and shifting channels," Canadian Journal of Economics, Canadian Economics Association, vol. 50(4), pages 965-994, November.
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    8. Bustos, Sebastian & Pomeranz, Dina & Suárez Serrato, Juan Carlos & Vila-Belda, José & Zucman, Gabriel, 2022. "The Race Between Tax Enforcement and Tax Planning: Evidence From a Natural Experiment in Chile," CEPR Discussion Papers 17347, Centre for Economic Policy Research.
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    1. Makoto Hasegawa & Takafumi Kawakubo & Takafumi Suzuki & Masayoshi Hayashi, 2026. "Tax-Motivated Transfer Pricing and Country-by-Country Reporting: Evidence from Japanese Customs Data," CIRJE F-Series CIRJE-F-1266, CIRJE, Faculty of Economics, University of Tokyo.

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