International Transfer Pricing: MNE Dependency on Knowledge of External Tax Consultants

2020 ◽  
Author(s):  
Martine Cools ◽  
J. Christian Plesner Rossing
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Profit Shifting ◽  
Limited Effect ◽  
Process Knowledge ◽  
The Individual ◽  
The Uk

This paper explores the dependency of multinational enterprises (MNEs) on the international transfer pricing (ITP) knowledge offered by external tax consultants. Based on interviews with 13 ITP/tax executives working for large MNEs in the UK, we find that the dependency on consultants varies significantly across specific ITP tasks. This dependency is not rooted in a lack of in-house technical ITP knowledge. Rather, consultants offer importantindustry and process knowledge, often at the individual tax inspector level, that MNEs need to successfully implement their ITP policy and to handle negotiations with tax authorities. Therecent OECD project on Base Erosion and Profit Shifting (BEPS) is found to have a limited effect on MNE dependency on consultants, except for the documentation task. We conclude that the profile of consultants as knowledge experts depends on the specific ITP task they undertake.

MULTINATIONAL TAX AVOIDANCE AND ANTI-AVOIDANCE ENFORCEMENT: FIRM-LEVEL EVIDENCE FROM DEVELOPING ASEAN COUNTRIES

2020 ◽  
pp. 1-17
Author(s):  
ATHIPHAT MUTHITACHAROEN ◽  
KRISLERT SAMPHANTHARAK
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Manufacturing Firms ◽  
Profit Shifting ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Avoidance Measures ◽  
Asean Countries

We use firm-level data from ASEAN5 to examine the significance of tax-motivated profit shifting by multinational enterprises and to analyze how anti-avoidance measures mitigate the profit shifting. We show that (1) tax-motivated profit shifting is statistically and economically significant, especially for manufacturing firms, (2) auditing and transfer-pricing scrutiny is more effective in reducing profit shifting than documentation requirement alone and (3) tax-motivated profit shifting is prominent for large firms, while anti-tax avoidance measures result in the absence of profit shifting detected from small manufacturing firms. The findings have important implications for developing countries with weak governance but dependent on MNEs.

scholarly journals Profit shifting in Brazil and the impact of tax havens

2021 ◽  
Vol 32 (85) ◽  
pp. 95-108
Author(s):  
Alex A. T. Rathke
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Profit Maximization ◽  
Profit Shifting ◽  
Tax Havens ◽  
Tax Rate ◽  
Pricing Rules ◽  
Robust Least Squares ◽  
High Level ◽  
The Impact

ABSTRACT We investigate tax-induced profit shifting in Brazil and the impact of tax havens on the shifting behavior of firms. Profit shifting research in Brazil is virtually non-existent, although the shifting incentives in Brazil are prominent. Our research fills this gap with evidences in the novel Brazilian context. Profit shifting is a tax-minimization strategy where multinational enterprises perform intra-firm transactions to allocate taxable profits to low-tax locations. Brazil combines a remarking set of profit shifting incentives, especially a high corporate tax rate, extremely complex tax system, and distinguished transfer pricing rules. Further researches may leverage from the shifting incentives in Brazil, since it provides opportunities to investigate additional factors that affect the shifting behavior of firms. We analyze 989 transaction-by-country observations for the period of 2010-2017. Baseline analysis follows the robust least squares approach with controlling covariates. Linear estimate model derives from the conventional Cobb-Douglas production function, to analyze the impact of shifting incentives on profit maximization. We find that Brazilian firms have a high level of intra-firm transactions with related parties located in low-tax countries, especially with tax havens. It represents a strong evidence of profit shifting behavior in Brazilian firms.

scholarly journals DOES THE RECENTLY IMPLEMENTED REGULATION ON COUNTRY-BY-COUNTRY REPORTING DETER TAX AVOIDANCE?

2020 ◽  
Vol 17 (1) ◽  
Author(s):  
Nala Kurniawan ◽  
◽  
Anggari Saputra ◽  
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Empirical Literature ◽  
Tax Rates ◽  
Profit Shifting ◽  
Percentage Point Increase ◽  
Point Increase ◽  
Private Disclosure ◽  
Tax Payments

To adhere with Base Erosion and Profit Shifting (BEPS) Action 13, Indonesia enacted regulations concerning Transfer Pricing Documentation and Country-by-Country Reporting (CbCR) to address the issue of tax avoidance. Those regulations introduced the requirement of CbCR in Indonesia, where Multinational Enterprises (MNEs) operating in Indonesia are required to provide tax authorities with geographic breakdown of their profitability, tax payments, and activities wherever they operate. Using the newly implemented CbCR in Indonesia as a treatment for private disclosure requirement, this study examines the effect of CbCR on MNEs tax avoidance. Employing EUR 750 million consolidated revenue threshold for disclosure and utilizing regression discontinuity design as well as difference-in-differences analysis, we document a 4-8 percentage point increase in effective tax rates among affected MNEs, thus reflecting a decrease in tax avoidance in treatment firms. Our findings contribute (i) to the recent empirical literature on how CbCR as a private disclosure affects corporate tax avoidance behavior and (ii) to the policy evaluation whether CbCR regulation has achieved its objective.

scholarly journals Transfer Pricing Audit Challenges and Dispute Resolution Effectiveness in Developing Countries with Specific Focus on Zimbabwe

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Favourate Yelesedzani Sebele-Mpofu ◽  
Eukeria Mashiri ◽  
Patrick Korera
Keyword(s):  
Developing Countries ◽  
Multinational Enterprises ◽  
Resource Constraints ◽  
Transfer Pricing ◽  
Specific Reference ◽  
Profit Shifting ◽  
Business World ◽  
Factors Affecting ◽  
The Core ◽  
Arm’S Length Principle

Abstract Base erosion and profit shifting activities of multinational enterprises (MNEs) have been a hot issue globally. Topical among the strategies employed by MNEs has been the issue of transfer pricing (TP). Developing countries are argued to be significantly affected by TP manipulation resulting in substantial tax revenues being lost. As a response to curb the unfavourable impacts of transfer mispricing, most developing countries have adopted the OECD TP guidelines and enacted TP legislation to regulate TP activities. The arm’s length principle is the core of TP legislation, yet it has brought challenges for tax administrators and their auditors in enforcing and assessing compliance respectively leading to disputes. In view of the ever-changing business world and continuous efforts by MNEs to minimise their tax obligations through income shifting, it was imperative to assess the factors affecting the effectiveness of TP audits and dispute resolutions as measures to enhance compliance and enforcement in developing countries, with specific reference to Zimbabwe. Findings include the lack of clarity in TP legislation, resource constraints and complexity of transactions, lack of expertise as well as the shortage of comparable data. Developing countries are encouraged to formulate clear TP regulations and invest in the capacitation of revenue authorities.

scholarly journals Nasjonalrapport for Norge

2014 ◽  
Vol 2014 (2) ◽  
pp. 173-194
Author(s):  
Martin Børresen ◽  
Marius Pilgaard ◽  
Marie Bjørneby
Keyword(s):  
Multinational Enterprises ◽  
Transfer Pricing ◽  
Tax Rates ◽  
Corporate Tax ◽  
Profit Shifting ◽  
Tax System ◽  
Tax Rate ◽  
Return On Capital ◽  
International Obligations ◽  
Equity Finance

Abstract Since the Tax Reform of 1992 Norway has had a tax system of relatively low tax rates and broad tax bases. Norway, along with other Nordic neighbours, did quite early substantially reduce its statutory corporate tax rate - reduced from 50.8 to 28 per cent as part of the 1992 Reform. After 1992 the rate has been constant at 28 until it was reduced marginally to 27 in 2014. Since 1992 the principal objective in designing the corporate tax system has been to ensure resource effectiveness. The role of the corporate (and capital) income tax is therefore to secure public revenue but at the same time minimising distortion. An important feature of the system is therefore that normal return on capital is taxed at the same rate, irrespective of whether it is earned as business income or not. The Report identifies three main challenges to the current corporate tax system. The first challenge discussed is the system’s effects on investments. It cannot be overlooked that the corporate tax rate in Norway is currently higher than the tax rate of many countries Norway is commonly compared with (e.g. other Nordic countries). The Report suggests that this can contribute to a reduction in the level of investment in Norway. The second identified challenge is the tax distortion between debt and equity finance. The Report briefly discusses neutrality in financing through equal tax treatment of debt and equity finance. The Report then discusses the implications and differences of an ACE and a CBIT model in this context. The final challenge discussed is base erosion and profit shifting (BEPS). Differences in countries’ tax rules create vast opportunities for tax planning, and largely for the benefit of multinational enterprises (MNEs), inter alia through transfer pricing. The Report suggests that BEPS over time may imply a serious threat in maintaining the revenue from the corporate tax base. The Report then acknowledges that a reduction in the formal tax rate may only to some extent address the problem; which indicates a need to consider other supplementing measures. One such measure is the interest deduction limitation rule, made effective from 2014. The rule was introduced to address profit shifting in MNEs. More generally the Report recognises that Norway cannot freely introduce measures against BEPS following international obligations. Finally the Report mentions the appointment of a Tax Commission in 2013. The Commission’s mandate is to review the Norwegian corporate tax system in light of international developments. The Commission shall deliver its report in the autumn of 2014.

Sisterhood and After

2019 ◽  
Author(s):  
Margaretta Jolly
Keyword(s):  
Oral History ◽  
Women's Liberation ◽  
Equal Rights ◽  
Collective Memories ◽  
Women’S Liberation ◽  
Two Generations ◽  
Personal Accounts ◽  
The Individual ◽  
The Uk ◽  
Cultural Taste

This ground-breaking history of the UK Women’s Liberation Movement explores the individual and collective memories of women at its heart. Spanning at least two generations and four nations, and moving through the tumultuous decades from the 1970s to the present, the narrative is powered by feminist oral history, notably the British Library’s Sisterhood and After: The Women’s Liberation Oral History Project. The book mines these precious archives to bring fresh insight into the lives of activists and the campaigns and ideas they mobilised. It navigates still-contested questions of class, race, violence, and upbringing—as well as the intimacies, sexualities and passions that helped fire women’s liberation—and shows why many feminists still regard notions of ‘equality’ or even ‘equal rights’ as insufficient. It casts new light on iconic campaigns and actions in what is sometimes simplified as feminism’s ‘second wave’, and enlivens a narrative too easily framed by ideological abstraction with candid, insightful, sometimes painful personal accounts of national and less well-known women activists. They describe lives shaped not only by structures of race, class, gender, sexuality and physical ability, but by education, age, love and cultural taste. At the same time, they offer extraordinary insights into feminist lifestyles and domestic pleasures, and the crossovers and conflicts between feminists. The work draws on oral history’s strength as creative method, as seen with its conclusion, where readers are urged to enter the archives of feminist memory and use what they find there to shape their own political futures.

Punk as Folk: Continuities and Tensions in the UK and Beyond

2020 ◽  
Author(s):  
Pete Dale
Keyword(s):  
Folk Music ◽  
Music Making ◽  
Collective Creativity ◽  
Living Tradition ◽  
Wide Range ◽  
The Us ◽  
The Common ◽  
The Individual ◽  
The Uk

Numerous claims have been made by a wide range of commentators that punk is somehow “a folk music” of some kind. Doubtless there are several continuities. Indeed, both tend to encourage amateur music-making, both often have affiliations with the Left, and both emerge at least partly from a collective/anti-competitive approach to music-making. However, there are also significant tensions between punk and folk as ideas/ideals and as applied in practice. Most obviously, punk makes claims to a “year zero” creativity (despite inevitably offering re-presentation of at least some existing elements in every instance), whereas folk music is supposed to carry forward a tradition (which, thankfully, is more recognized in recent decades as a subject-to-change “living tradition” than was the case in folk’s more purist periods). Politically, meanwhile, postwar folk has tended more toward a socialist and/or Marxist orientation, both in the US and UK, whereas punk has at least rhetorically claimed to be in favor of “anarchy” (in the UK, in particular). Collective creativity and competitive tendencies also differ between the two (perceived) genre areas. Although the folk scene’s “floor singer” tradition offers a dispersal of expressive opportunity comparable in some ways to the “anyone can do it” idea that gets associated with punk, the creative expectation of the individual within the group differs between the two. Punk has some similarities to folk, then, but there are tensions, too, and these are well worth examining if one is serious about testing out the common claim, in both folk and punk, that “anyone can do it.”

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 Socially Responsible HR in Action: Learning from Corporations Listed on the Dow Jones Sustainability Index World 2018/2019

2021 ◽  
Vol 13 (6) ◽  
pp. 3237
Author(s):  
Pyounggu Baek ◽  
Taesung Kim
Keyword(s):  
Multinational Enterprises ◽  
Corporate Sustainability ◽  
Action Learning ◽  
Socially Responsible ◽  
Sustainability Index ◽  
Responsible Management ◽  
Dow Jones Sustainability Index ◽  
The Individual ◽  
Corporate Social

As ethical management, corporate social responsibility (CSR), and corporate sustainability (CS) are increasingly permeating business discourse, contemplating the role of human resources (HR) in helping organizations with socially responsible management is a proactive acceptance of stakeholders’ expectations while reinforcing the field’s identity and contribution. In response, the we examined the HR policies and practices of 46 multinational enterprises (MNEs) listed on the Dow Jones Sustainability Index (DJSI) World 2018/2019 to add new insights to the literature and inform the HR field on how to move forward with socially responsible HR. Content analysis and inductive conceptualization of the MNEs’ HR activities produced a triangular pyramid for socially responsible HR, constructed with eight major themes at the individual, organizational, and institutional levels. Building on the findings, we suggest implications for practice and research, and conclude with urging the HR community to demonstrate leadership in setting the agendas and facilitating change toward socially responsible management.

scholarly journals ‘Rising demand and decreasing resources’: Theorising the ‘cost of austerity’ as a barrier to social worker discretion

2021 ◽  
pp. 1-18
Author(s):  
CIARÁN MURPHY
Keyword(s):  
Social Worker ◽  
Child Protection ◽  
Child Protection Services ◽  
Radical Reform ◽  
Critical Realist ◽  
Documentary Analysis ◽  
Effective System ◽  
The Individual ◽  
The Uk ◽  
The Cost

Abstract The Munro Review of Child Protection asserted that the English child protection system had become overly ‘defensive’, ‘bureaucratised’ and ‘standardised’, meaning that social workers were not employing their discretion in the interests of the individual child. This paper reports on the results of an ethnographic case study of one of England’s statutory child protection teams. The research sought to explore the extent of social worker discretion relative to Munro’s call for ‘radical reform’ and a move towards a more ‘child-centred’ system. Employing an iterative mixed methods design – encompassing documentary analysis, observation, focus group, questionnaire, interview and ‘Critical Realist Grounded Theory’ – the study positioned the UK Government’s prolonged policy of ‘austerity’ as a barrier to social worker discretion. This was because the policy was seen to be contributing to an increased demand for child protection services; and a related sense amongst practitioners that they were afforded insufficient time with the child to garner the requisite knowledge, necessary for discretionary behaviour. Ultimately, despite evidence of progress relative to assertions that social worker discretion had been eroded, the paper concludes that there may still be ‘more to do’ if we are to achieve the ‘child-centred’ and ‘effective’ system that Munro advocated.

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