Transfer Pricing: Roles and Regimes
Against a background of rather mixed evidence about transfer pricing practices in multinational enterprises (MNEs) and varying attitudes on the part of tax authorities, this paper explores how multiple aims in transfer pricing can be pursued across four different transfer pricing regimes. A MNE has a production subsidiary in one country, from where it sells the produced good locally as well as to a sales subsidiary in a second country. The latter subsidiary is engaged in duopolistic competition with a local competitor. The MNE has two aims in setting the transfer price: strategic delegation and tax minimization. We examine the extent to which the four transfer pricing regimes we set up allow the MNE to pursue these aims. While neither strategic delegation nor tax minimization will be eliminated, trade-offs are inevitable, albeit to varying degree.
|Date of creation:||2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
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.:
- Fershtman, Chaim & Judd, Kenneth L, 1987.
"Equilibrium Incentives in Oligopoly,"
American Economic Review,
American Economic Association, vol. 77(5), pages 927-40, December.
- Steven D. Sklivas, 1987. "The Strategic Choice of Managerial Incentives," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 452-458, Autumn.
- Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June.
- Michael P. Devereux & Christian Keuschnigg, 2009.
"The Distorting Arm’s Length Principle,"
0910, Oxford University Centre for Business Taxation.
- Christian Keuschnigg & Michael P. Devereux, 2009. "The Distorting Arm's Length Principle," University of St. Gallen Department of Economics working paper series 2009 2009-20, Department of Economics, University of St. Gallen.
- Devereux, Michael P. & Keuschnigg, Christian, 2009. "The Distorting Arm's Length Principle," CEPR Discussion Papers 7375, C.E.P.R. Discussion Papers.
- Michael L. Katz, 1991.
"Game-Playing Agents: Unobservable Contracts as Precommitments,"
RAND Journal of Economics,
The RAND Corporation, vol. 22(3), pages 307-328, Autumn.
- Katz, Michael L., 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," Department of Economics, Working Paper Series qt79b870w0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Michael L. Katz., 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," Economics Working Papers 91-172, University of California at Berkeley.
- Nielsen, Soren Bo & Raimondos-Møller, Pascalis & Schjelderup, Guttorm, 2006.
"Taxes and Decision Rights in Multinationals,"
CEPR Discussion Papers
5952, C.E.P.R. Discussion Papers.
- Nielsen, Søren Bo & Raimondos-Møller, Pascalis & Schjelderup, Guttorm, 2006. "Taxes and Decision Rights in Multinationals," Working Papers 07-2006, Copenhagen Business School, Department of Economics.
- Nielsen, Søren Bo & Raimondos-Møller, Pascalis & Schjelderup, Guttorm, 2007. "Taxes and Decision Rights in Multinationals," Discussion Papers 2007/11, Department of Business and Management Science, Norwegian School of Economics.
- Guttorm Schjelderup & Lars Sorgard, 1997. "Transfer Pricing as a Strategic Device for Decentralized Multinationals," International Tax and Public Finance, Springer, vol. 4(3), pages 277-290, July.
- Nielsen, Søren Bo & Raimondos-Møller, Pascalis & Schjelderup, Guttorm, 2010. "Company taxation and tax spillovers: Separate accounting versus formula apportionment," European Economic Review, Elsevier, vol. 54(1), pages 121-132, January.
- Charles E. Hyde & Chongwoo Choe, 2005. "Keeping Two Sets of Books: The Relationship Between Tax and Incentive Transfer Prices," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 165-186, 03.
- Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4694. 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: (Julio Saavedra)
If references are entirely missing, you can add them using this form.