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Transfer pricing and corporate social responsibility: arguments, views and agenda

Author

Listed:
  • Simplice A. Asongu

    (Covenant University)

  • Joseph I. Uduji

    (University of Nigeria)

  • Elda N. Okolo-Obasi

    (University of Nigeria)

Abstract

The central thesis of the paper is that multinational companies (MNC) should invest in the use of “soft” methods (socially responsible behavior) to mitigate costs in society accrued due to use of “hardcore” tax evasion tactics (transfer mispricing) to maximize profits from operations in developing countries and/or countries with weak or inefficient tax laws and tax collection institutions. Therefore, we articulate the argument of corporate social responsibility (CSR) as an indirect compensation for transfer mispricing. Our aim is not to present CSR as a solution to transfer mispricing. An analytical approach is based on a content analysis of the existing literature with emphasis on a case study. We first discuss the dark side of transfer pricing (TP), next we present the link between TP and poverty and finally we advance arguments for CSR as a compensation for transfer mispricing. While acknowledging that TP is a legal accounting practice, we argue that in light of its poverty and underdevelopment externalities, the practice per se should be a strong defence for CSR because it is also associated with schemes that deprive developing countries of the capital essential for investment in health, education and development programmes.

Suggested Citation

  • Simplice A. Asongu & Joseph I. Uduji & Elda N. Okolo-Obasi, 2019. "Transfer pricing and corporate social responsibility: arguments, views and agenda," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 32(3), pages 353-363, November.
  • Handle: RePEc:spr:minecn:v:32:y:2019:i:3:d:10.1007_s13563-019-00195-2
    DOI: 10.1007/s13563-019-00195-2
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    Cited by:

    1. Joseph I. Uduji & Elda N. Okolo-Obasi & Vincent A. Onodugo & Justitia O. Nnabuko & Babatunde A. Adedibu, 2020. "Corporate Social Responsibility and the Role of Rural Women in Strengthening Agriculture-Tourism Linkages in Nigeria’s Oil Producing Communities," Working Papers of the African Governance and Development Institute. 20/067, African Governance and Development Institute..
    2. Peter Ansu-Mensah & Emmanuel Opoku Marfo & Lyon Salia Awuah & Kwame Oduro Amoako, 2021. "Corporate social responsibility and stakeholder engagement in Ghana’s mining sector: a case study of Newmont Ahafo mines," International Journal of Corporate Social Responsibility, Springer, vol. 6(1), pages 1-22, December.
    3. Joseph Ikechukwu Uduji & Elda Nduka Okolo-Obasi & Simplice Asongu, 2020. "Women’s participation in the offshore and inshore fisheries entrepreneurship: The role of CSR in Nigeria’s oil coastal communities," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing, vol. 14(2), pages 247-275, April.
    4. Joseph I. Uduji & Elda N. Okolo-Obasi & Simplice A. Asongu, 2020. "Sustainable Peace building and Development in Nigeria’s Post-Amnesty Programme: the Role of Corporate Social Responsibility in Oil Host Communities," Research Africa Network Working Papers 20/026, Research Africa Network (RAN).
    5. Joseph I. Uduji & Elda N. Okolo-Obasi & Vincent A. Onodugo & Justitia O. Nnabuko & Babatunde A. Adedibu, 2020. "Corporate Social Responsibility and the Role of Rural Women in Strengthening Agriculture-Tourism Linkages in Nigeria’s Oil Producing Communities," Research Africa Network Working Papers 20/067, Research Africa Network (RAN).
    6. Uduji, Joseph Ikechukwu & Okolo-Obasi, Elda Nduka & Asongu, Simplice A., 2021. "Oil extraction in Nigeria's Ogoniland: The role of corporate social responsibility in averting a resurgence of violence," Resources Policy, Elsevier, vol. 70(C).
    7. Joseph I. Uduji & Elda N. Okolo-Obasi & Simplice A. Asongu, 2019. "Corporate social responsibility in Nigeria and multinational corporations in the fight against human trafficking in oil-producing communities," Working Papers of the African Governance and Development Institute. 19/056, African Governance and Development Institute..
    8. Joseph I. Uduji & Elda N. Okolo-Obasi & Simplice A. Asongu, 2020. "Analysis of Farmers’ Food Price Volatility and Nigeria’s Growth Enhancement Support Scheme," Working Papers of the African Governance and Development Institute. 20/069, African Governance and Development Institute..
    9. Joseph I. Uduji & Elda N. Okolo-Obasi, 2021. "Empowerment of Rural Young People in Informal Farm Entrepreneurship: The Role of Corporate Social Responsibility in Nigeria’s Oil Producing Communities," Working Papers 21/033, European Xtramile Centre of African Studies (EXCAS).
    10. Elda N. Okolo‐Obasi & Joseph I. Uduji & Simplice A. Asongu, 2020. "Strengthening women's participation in the traditional enterprises of sub‐saharan Africa: The role of corporate social responsibility initiatives in Niger delta, Nigeria," African Development Review, African Development Bank, vol. 32(S1), pages 78-90, November.
    11. Joseph I. Uduji & Elda N. Okolo-Obasi & Vincent A. Onodugo & Justitia O. Nnabuko & Babatunde A. Adedibu, 2020. "Corporate Social Responsibility and the Role of Rural Women in Strengthening Agriculture-Tourism Linkages in Nigeria’s Oil Producing Communities," Working Papers 20/067, European Xtramile Centre of African Studies (EXCAS).
    12. Joseph I. Uduji & Elda N. Okolo-Obasi & Simplice A. Asongu, 2020. "Sustainable Peace building and Development in Nigeria’s Post-Amnesty Programme: the Role of Corporate Social Responsibility in Oil Host Communities," Working Papers of the African Governance and Development Institute. 20/026, African Governance and Development Institute..
    13. Joseph I. Uduji & Elda N. Okolo-Obasi, 2021. "Empowerment of Rural Young People in Informal Farm Entrepreneurship: The Role of Corporate Social Responsibility in Nigeria’s Oil Producing Communities," Working Papers of the African Governance and Development Institute. 21/033, African Governance and Development Institute..

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    More about this item

    Keywords

    Corporate social responsibility; Transfer pricing; Extreme poverty;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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