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Transfer Pricing and Corporate Social Responsibility: Arguments, Views and Agenda

Author

Listed:
  • Simplice A. Asongu

    () (Yaoundé/Cameroon)

  • Joseph I. Uduji

    () (University of Nigeria, Nsukka, Nigeria)

  • Elda N. Okolo-Obasi

    () (University of Nigeria, Nsukka, 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 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," CEREDEC Working Papers 19/029, Centre de Recherche pour le Développement Economique (CEREDEC).
  • Handle: RePEc:aby:wpaper:19/029
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    References listed on IDEAS

    as
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    Cited by:

    1. Uduji, Joseph & Okolo-Obasi, Elda & Asongu, Simplice, 2019. "Corporate social responsibility in Nigeria and multinational corporations in the fight against human trafficking in oil-producing communities," MPRA Paper 101556, University Library of Munich, Germany.
    2. 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).
    3. 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..

    More about this item

    Keywords

    Corporate Social Responsibility; Transfer pricing; Extreme poverty;

    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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