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International transfer pricing in multinational enterprises

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  • Plesner Rossing, Christian
  • Cools, Martine
  • Rohde, Carsten

Abstract

Current curricula in management accounting stress the role of transfer pricing as a tool for measuring the performance of responsibility centers and their managers. Recently, however, multinational enterprises (MNEs) have felt increasing pressure to comply with transfer pricing tax regulation. As a result, tax risk management considerations play a key role in the transfer pricing decisions of MNEs today. This case seeks to provide you with examples of the core principles of international transfer pricing, as well as to allow you to discuss international transfer pricing in the context of responsibility accounting. Specifically, the case study is a fictional MNE, allowing you to apply the OECD Guidelines in practice to cross-border transfers within an MNE, and to discuss the implications of tax-based transfer pricing for responsibility accounting. As a basis for working on the case study, the Appendix provides an overview of the ‘OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations’ (OECD, 2010), hereafter OECD Guidelines, upon which most transfer pricing regulations worldwide are based. It includes an introduction to the arm’s length principle, OECD-accepted transfer pricing methods, and comparability analysis procedures for identifying comparable transactions between independent parties. The case study assumes that you are familiar with responsibility accounting and transfer pricing as discussed by standard management accounting textbooks.

Suggested Citation

  • Plesner Rossing, Christian & Cools, Martine & Rohde, Carsten, 2017. "International transfer pricing in multinational enterprises," Journal of Accounting Education, Elsevier, vol. 39(C), pages 55-67.
    • Handle: RePEc:eee:joaced:v:39:y:2017:i:c:p:55-67
    DOI: 10.1016/j.jaccedu.2017.02.002
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    References listed on IDEAS

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    1. Cools, Martine & Emmanuel, Clive & Jorissen, Ann, 2008. "Management control in the transfer pricing tax compliant multinational enterprise," Accounting, Organizations and Society, Elsevier, vol. 33(6), pages 603-628, August.
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    Cited by:

    1. Miklós Szanyi, 2019. "Globalization - challenges for economic policy," IWE Working Papers 263, Institute for World Economics - Centre for Economic and Regional Studies.
    2. Ioana Ignat, 2021. "Practical Approach Regarding The Benchmark Study In The Context Of A Transfer Pricing Analysis," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 119-125, December.
    3. Plesner Rossing, Jacob Christian & Pearson, Thomas C., 2022. "Tax-compliant transfer pricing of intra-group services: The soft drink case," Journal of Accounting Education, Elsevier, vol. 61(C).
    4. da Silva Stefano, Gustavo & Antunes, Tiago dos Santos & Lacerda, Daniel Pacheco & Wolf Motta Morandi, Maria Isabel & Piran, Fabio Sartori, 2022. "The impacts of inventory in transfer pricing and net income: Differences between traditional accounting and throughput accounting," The British Accounting Review, Elsevier, vol. 54(2).
    5. Hoozée, Sophie & Maussen, Sophie & Bruggeman, Werner & Scheipers, Geert, 2020. "Fitting responsibility center structures to strategy: Bakery Products International," Journal of Accounting Education, Elsevier, vol. 53(C).
    6. Mai, Nhat Chi, 2020. "The Effects Of The Base Erosion And Profit Shifting (Beps) Action 13 On Transfer Pricing Practices: A Comparative Empirical Study Of New Zealand And Vietnam," OSF Preprints gq27c, Center for Open Science.

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