IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpol/v2008y2008i1id629p40-53.html
   My bibliography  Save this article

Daňová optimalizace nadnárodních společností prostřednictvím vnitřních cen: přehled hlavních teoretických východisek a možných makroekonomických dopadů
[Tax optimization of multinational firms through transfer pricing: a survey of main theoretical foundations and potential macroeconomic impacts]

Author

Listed:
  • Filip Novotný

Abstract

If taxes are the same across countries and no tariffs are imposed on international trade, the optimal strategy of a multinational firm is to set transfer prices at marginal costs of its affiliated firms. But in reality we observe trade tariffs and tax differences among countries which lead multinational firms to deviate transfer prices from marginal costs. Multinationals use transfer prices in order to increase profits in affiliates which are located in low tax countries at the expense of affiliates which are located in high tax countries. I demonstrate on a sample of EU countries that the lower the tax rate in a country the higher the profitability of foreign direct investment in that country. As some studies suggest the gross value added and export prices are artificially overvalued in low tax countries and artificially undervalued in high tax countries.

Suggested Citation

  • Filip Novotný, 2008. "Daňová optimalizace nadnárodních společností prostřednictvím vnitřních cen: přehled hlavních teoretických východisek a možných makroekonomických dopadů
    [Tax optimization of multinational firms thro
    ," Politická ekonomie, University of Economics, Prague, vol. 2008(1), pages 40-53.
  • Handle: RePEc:prg:jnlpol:v:2008:y:2008:i:1:id:629:p:40-53
    as

    Download full text from publisher

    File URL: http://www.vse.cz/polek/download.php?jnl=polek&pdf=629.pdf
    Download Restriction: free of charge

    File URL: http://www.vse.cz/polek/629
    Download Restriction: free of charge

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Tomáš Buus & Jaroslav BRADA, 2008. "On the Necessity of Using Average Cost as a Base for Transfer Price," European Financial and Accounting Journal, University of Economics, Prague, vol. 2008(3), pages 79-94.

    More about this item

    Keywords

    foreign trade; imperfect competition; marginal costs; multinational firm; tax optimization; transfer pricing;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    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:prg:jnlpol:v:2008:y:2008:i:1:id:629:p:40-53. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frantisek Sokolovsky). General contact details of provider: http://edirc.repec.org/data/uevsecz.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.