International transfer pricing and income shifting: evidence from the UK
The potential use of international transfer pricing (ITP) as an income-shifting mechanism by multinational enterprises (MNEs) has long been recognized. However, there is relatively little evidence to substantiate or discount this claim in relation to UK-based foreign-controlled enterprises (FCEs). This paper examines the possible use of ITP as an income-shifting mechanism by FCEs operating in the UK. The methodological approach involves the comparison of the profitability (performance) and dividend (post-performance) distributions of a sample of FCEs with those of UK-controlled enterprises (UKCEs) over a two-year period. The two samples are matched on the basis of their total assets (capability). Results reveal significant differences in the profitability and dividend distributions of the two groups. FCEs underperform UKCEs, but their level of dividend distribution outstrips those of UKCEs. Based on this sample of seventy-two companies, a firm is more likely to be an FCE, rather than a UKCE, if it reports a combination of lower performance and higher post-performance distribution. Evidence of significant income shifting by FCEs is confirmed and the claim that ITP is the key mechanism for such shifts cannot be dismissed.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 7 (1998)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/REAR20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/REAR20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dietrich, J. Kimball & Sorensen, Eric, 1984. "An application of logit analysis to prediction of merger targets," Journal of Business Research, Elsevier, vol. 12(3), pages 393-402, September.
- Harry Grubert & Timothy Goodspeed & Deborah L. Swenson, 1993. "Explaining the Low Taxable Income of Foreign-Controlled Companies in the United States," NBER Chapters, in: Studies in International Taxation, pages 237-276 National Bureau of Economic Research, Inc.
- David Harris & Randall Morck & Joel B. Slemrod, 1993.
"Income Shifting in U.S. Multinational Corporations,"
in: Studies in International Taxation, pages 277-308
National Bureau of Economic Research, Inc.
- David Harris & Randall Morck & Joel Slemrod & Bernard Yeung, 1991. "Income Shifting in U.S. Multinational Corporations," NBER Working Papers 3924, National Bureau of Economic Research, Inc.
- Harris, D. & Morck, R. & Slemrod, J., 1991. "Income Shifting in U.S. Multinational Corporations," Working Papers 287, Research Seminar in International Economics, University of Michigan.
- Picciotto, Sol, 1992. "International taxation and intrafirm pricing in transnational corporate groups," Accounting, Organizations and Society, Elsevier, vol. 17(8), pages 759-792, November.
- Grubert, Harry & Mutti, John, 1991. "Taxes, Tariffs and Transfer Pricing in Multinational Corporate Decision Making," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 285-293, May.
- Randall Morck, 2006. "Corporations," Harvard Institute of Economic Research Working Papers 2101, Harvard - Institute of Economic Research.
- Peter Buckley & Jane Frecknall Hughes, 1997. "Japanese transfer pricing policy: a note," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 13-17.
- Wi Saeng Kim & Esmeralda O Lyn, 1990. "FDI Theories and the Performance of Foreign Multinationals Operating in the U.S," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 21(1), pages 41-54, March.
- Goodspeed, T-J & White, A-D, 1996. "International taxation," Papers 96-11, Wellesley College - Department of Economics.
- repec:fth:michin:287 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:7:y:1998:i:4:p:623-635. 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: (Michael McNulty)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.