Do transfer pricing laws limit international income shifting? Evidence from European multinationals
In recent years several countries have augmented their national tax laws by transfer pricing legislations which intend to limit the leeway of multinational fi rms to exploit international corporate tax rate diverences and relocate profit to low-tax affiliates by distorting intra-firm transfer prices. The aim of this paper is to empirically investigate whether these laws are instrumental in restricting shifting behaviour. To do so, we exploit unique information on the scope and evolution of national transfer pricing laws and link it with panel data on European multinationals. In line with previous studies, we find evidence for tax-motivated profit shifting. The analysis further suggests that transfer pricing rules significantly reduce shifting activities. The effect is economically relevant, suggesting that the legislations may be socially desirable despite the high administrative burden they impose on fi rms and tax authorities.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Park End Street, Oxford OX1 1HP UK|
Phone: +44 (0)1865 288800
Fax: +44 (0)1865 288805
Web page: http://www.sbs.ox.ac.uk/ideas-impact/tax/
More information through EDIRC
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.:
- Harry Huizinga & Luc Laeven & Gaetan Nicodeme, 2006.
"Capital structure and international debt shifting,"
European Economy - Economic Papers 2008 - 2015
263, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Harry Huizinga & Luc Laeven & Gaëtan Nicodème, 2007. "Capital Structure and International Debt Shifting," Working Papers CEB 07-015.RS, ULB -- Universite Libre de Bruxelles.
- Huizinga, Harry & Laeven, Luc & Nicodème, Gaëtan, 2006. "Capital Structure and International Debt Shifting," CEPR Discussion Papers 5882, C.E.P.R. Discussion Papers.
- Luc Laeven & Harry Huizinga & Gaetan Nicodeme, 2007. "Capital Structure and International Debt Shifting," IMF Working Papers 07/39, .
- repec:ntj:journl:v:52:y:1999:i:n._2:p:305-22 is not listed on IDEAS
- repec:ntj:journl:v:54:y:2001:i:n._1:p:7-26 is not listed on IDEAS
- Swenson, Deborah L., 2001. "Tax Reforms and Evidence of Transfer Pricing," National Tax Journal, National Tax Association, vol. 54(1), pages 7-26, March.
- Hines, James R. Jr., 1999. "Lessons From Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(2), pages 305-322, June.
- Buettner, Thiess & Wamser, Georg, 2013.
"Internal Debt and Multinational Profit Shifting: Empirical Evidence From Firm-Level Panel Data,"
National Tax Journal,
National Tax Association, vol. 66(1), pages 63-95, March.
- Thiess Buettner & Georg Wamser, 2009. "Internal Debt and Multinationals' Profit Shifting - Empirical Evidence from Firm-Level Panel Data," Working Papers 0918, Oxford University Centre for Business Taxation.
- Martin Ruf & Alfons J. Weichenrieder, 2012.
"The taxation of passive foreign investment: lessons from German experience,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 45(4), pages 1504-1528, November.
- Martin Ruf & Alfons Weichenrieder, 2009. "The Taxation of Passive Foreign Investment - Lessons from German Experience," CESifo Working Paper Series 2624, CESifo Group Munich.
When requesting a correction, please mention this item's handle: RePEc:btx:wpaper:1307. 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: (Dongxian Guo)
If references are entirely missing, you can add them using this form.