scholarly journals A New Proposal for Setting Intra-Company Transfer Prices

1982 ◽  
Vol 12 (46) ◽  
pp. 97-104 ◽  
Author(s):  
R. Manes ◽  
R. Verrecchia
Keyword(s):  
Transfer Prices

scholarly journals Substitution across profit shifting methods and the impact on thin capitalization rules

2021 ◽  
Author(s):  
Gideon Goerdt ◽  
Wolfgang Eggert
Keyword(s):  
Multinational Firms ◽  
Transfer Pricing ◽  
Multinational Firm ◽  
Profit Shifting ◽  
Goods And Services ◽  
Internal Goods ◽  
Transfer Prices ◽  
Debt Shifting ◽  
The Impact ◽  
Thin Capitalization

AbstractThin capitalization rules limit firms’ ability to deduct internal interest payments from taxable income, thereby restricting debt shifting activities of multinational firms. Since multinational firms can limit their tax liability in several ways, regulation of debt shifting may have an impact on other profit shifting methods. We therefore provide a model in which a multinational firm can shift profits out of a host country by issuing internal debt from an entity located in a tax haven and by manipulating transfer prices on internal goods and services. The focus of this paper is the analysis of regulatory incentives, $$(i)$$ ( i ) if a multinational firm treats debt shifting and transfer pricing as substitutes or $$(ii)$$ ( i i ) if the methods are not directly connected. The results provide a new aspect for why hybrid thin capitalization rules are used. Our discussion in this paper explains why hybrid rules can result in improvements in welfare if multinational firms treat methods of profit shifting as substitutes.

scholarly journals ICAN- International Common Assessment Number: The need of the hour

2012 ◽  
Vol 2 (3) ◽  
pp. 147
Author(s):  
G.V. Satya Sekhar
Keyword(s):  
Financial Reporting ◽  
Tax Planning ◽  
Assessment System ◽  
Monitoring And Control ◽  
Double Taxation ◽  
Policy Makers ◽  
Corporate World ◽  
Transfer Prices ◽  
And Control ◽  
Uniform Assessment

When   there is a system of international financial reporting system (IFRS) is much in discussion, why the policy makers are not thinking for ICAN( International Common Assessment Number) in place of PAN (Permanent Assessment Number)as in the  in case of assessees in India.    In this situation, any individual’s income earned any where in the world can become  under a common tax planning tool.The government of India has agreements with most other nations that determine how multinational companies are taxed. In other words, the tax treaties attempt to avoid the double-taxation that would occur if two nations taxed the same income. Since transfer prices represent revenue to the upstream division and an expense to the downstream division, the transfer price affects the calculation of divisional profits that represent taxable income in the nations where the divisions are based. Further, double taxation avoidance agreements also helpful for monitoring and control of fraudulent affairs in the corporate world. In this context, this paper is intended to examine the significance of uniform assessment system in the entire world and need for common assessment number. 

scholarly journals Do Government Regulations Prevent Transfer Pricing Manipulations?

2011 ◽  
Vol 4 (10) ◽  
Author(s):  
Canri Chan
Keyword(s):  
Multinational Corporations ◽  
Transfer Pricing ◽  
Cash Flows ◽  
Transfer Price ◽  
Tax Rates ◽  
Performance Measurements ◽  
Government Regulations ◽  
Transfer Prices ◽  
Profit Performance ◽  
Efficient Allocations

This study investigated the effects of government regulations and incentives on the setting of transfer prices. I found significant main effects of both variables on transfer price choices. Transfer pricing is important, particularly for Multinational Corporations (MNCs), because of increased trends toward globalization of business activities and, simultaneously, decentralization. These trends have led to increased pressures for sound internal pricing systems, specifically transfer pricing, in order for organizations to ensure optimal and efficient allocations of organization resources and to provide profit performance measurements (Tang 1992). It has generally been recognized in the literature that in order to maximize after tax cash flows, MNCs shift profits from high to low tax jurisdictions. Governments in some countries, particularly those with high tax rates, are greatly concerned as to whether or not companies attempt to avoid tax liabilities via transfer pricing manipulation, specifically in terms of trying to shift profits to lower tax jurisdictions, and have enacted laws to limit transfer price choice.

The Effect of Environmental Risk on the Efficiency of Negotiated Transfer Prices

2019 ◽  
Vol 36 (2) ◽  
pp. 1122-1145 ◽  
Author(s):  
Markus C. Arnold ◽  
Robert M. Gillenkirch ◽  
R. Lynn Hannan
Keyword(s):  
Environmental Risk ◽  
Transfer Prices

THE ANALYSIS OF PRE AND POST NEGOTIATION OF FRAMING AND PARTNER’S OBJECTIVE ON TRANSFER PRICES

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
Sandy Arief ◽  
Supriyono Supriyono
Keyword(s):  
Accounting Information ◽  
Transfer Price ◽  
The Other ◽  
Accounting Students ◽  
Market Prices ◽  
Price Expectation ◽  
Expectation Gap ◽  
Transfer Prices ◽  
Loss Frame ◽  
The Impact

Transfer price negotiations are important to managers as they influence both their own and other divisional profits. These transfer prices are affected by both economic factors (market prices) and behavioral factors including fairness on judgments about negotiated transfer prices. In the current study, we examine whether the impact of accounting information on managers’ transfer price expectations are affected by the way accounting information is framed (either as potential gains or potential losses) and the managers’ perception of the other negotiation partners’ objective (whether their partner’s objective involves high or lowconcern-for-others). These expectations are important as they directly affect the costs and outcomes of negotiations. A controlled laboratory experiment was conducted to test the proposed hypotheses, using a 2 x 2 x 2 between-subjects design. The participants of an experiment were 216 undergraduate accounting students from Faculty of Economics and Business, Soegijapranata Catholic University, Semarang. The results of this study that compared to the mainframe, a loss frame exacerbates managers’ self-serving bias and increases the transfer price expectation gap between buyers and sellers. Further, we found that the negotiation partner’s objective had a significant impact on sellers’ transfer price judgments. This finding also found that the degree of concern for the other party has a significant impact on the judgment, in particular, the transfer price for the seller division.

Inconsistent tax transfer prices: tax filings, audits, and double taxation

2021 ◽  
Author(s):  
Johannes Lorenz ◽  
Caren Sureth-Sloane ◽  
Markus Diller
Keyword(s):  
Double Taxation ◽  
Transfer Prices

Full-Cost Transfer Pricing and Cost Management

2016 ◽  
Vol 28 (3) ◽  
pp. 63-81 ◽  
Author(s):  
Jan Bouwens ◽  
Bert Steens
Keyword(s):  
Cost Management ◽  
Transfer Pricing ◽  
Data Availability ◽  
Credible Commitment ◽  
Risk Of Falling ◽  
Full Cost ◽  
Cost Cutting ◽  
Death Spiral ◽  
Transfer Prices ◽  
Jel Classifications

ABSTRACT Full-cost transfer pricing has been criticized for providing production units with insufficient incentives to economize. Our empirical study based on data from a large producer of consumer goods shows that charging full-cost transfer prices to downstream sales units can send upstream production units into a death spiral. However, our results also suggest that production units reduce costs to prevent the death spiral. We observe that managers focus their cost-cutting efforts on unit variable costs and on products with the best sales prospects. These results also suggest that, when production units are at risk of falling into a death spiral, full-cost transfer pricing can serve as a credible commitment device to motivate managers to reduce costs. JEL Classifications: D24; M31; M41; M50. Data Availability: We were given the opportunity to work with a company's proprietary database that contains sensitive and classified data that cannot be disclosed due to a non-disclosure agreement. At the start of our research, the company agreed to be referred to as Carepro, which is fictitious and does not correspond to any other existing company with that same or a similar name.

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