scholarly journals MAXIMIZING PROFIT AFTER TAXATION BY EFECTS OF TRANSFER PRICES IN MULTINATIONAL COMPANIES

2014 ◽  
Vol 1 (9) ◽  
pp. 85
Author(s):  
Srđan Lalić ◽  
Brankica Dragičević
Keyword(s):  
Free Market ◽  
Transfer Pricing ◽  
Multinational Companies ◽  
The World ◽  
Transfer Prices ◽  
The Creation ◽  
International Tax ◽  
The Impact

About 70 % of today's world tradetakes place between related companies. Transactionsbetween them are called assignment or transfer, andthe prices at which the group of related companiesaccounted value of the purchase and sale of financialresults, are called transfer pricing. The main aim ofthis paper is to determine the impact that transferpricing has on the creation of international tax issues.Transfer prices between related parties maysubstantially differ from the prices created for thesame or similar transactions between unrelatedindividuals in a free market. Transfer prices are animportant tax issue which is characterized byincreasing complexity and level of commitment of taxauthorities around the world on this issue.

Analyzing Transfer Prices Impact at European Level on Romanian Companies

2020 ◽  
Vol 26 (2) ◽  
pp. 52-57
Author(s):  
Mihaela Paraschiva Luca ◽  
Cătălin Florin Zeti ◽  
Ioan Cosmin Pițu ◽  
Bianca Cristina Ciocănea
Keyword(s):  
Data Analysis ◽  
Scientific Literature ◽  
Transfer Pricing ◽  
Multinational Companies ◽  
European Level ◽  
Profit Shifting ◽  
Tax Base ◽  
Fiscal Reforms ◽  
Transfer Prices ◽  
The Impact

AbstractAt present, due to the current project of the Organization for Economic Cooperation and Development, with regard to tax base erosion and profit shifting (OECD BEPS), as well as with regard to the impact of global fiscal reforms in development, in transfer pricing, fiscal authorities are the ones in control in relationship with companies. Within this context, the present study presents and analyses the influences of the transfer pricing current environment at European level in the case of Romanian companies. Realizing a detailed and deep documentation of the existing scientific literature in this field and using a comparative data analysis lead to the conclusion that the diminishing in impact of these influences may be accomplished by the finding of new solutions by multinational companies through which they should manage accordingly the associated risk of transfer pricing and prevent the eventual misunderstandings with regard to fiscal authorities.

scholarly journals Transfer pricing in agricultural enterprises

2011 ◽  
Vol 57 (No. 7) ◽  
pp. 311-321
Author(s):  
D. Nerudová ◽  
V. Solilová
Keyword(s):  
Multinational Enterprises ◽  
Free Market ◽  
Transfer Pricing ◽  
Medium Size ◽  
Legal Form ◽  
Agricultural Enterprises ◽  
Arm’S Length Principle ◽  
International Tax ◽  
The Impact

International tax issues already have not been problems of multinational enterprises. The effect of globalization and international business development causes that many small and medium size firms including agricultural entities are now engaged in the cross-border transactions and have to face the international tax issues. One of the important areas of international taxes is transfer pricing. The transactions between these persons should be assessed at their arm's length price according to the arm's length principle (internationally accepted standard) as the price which would have been agreed between the unrelated parties in free market conditions. The aim of the paper is to evaluate the impact of the selection of the form of the subsidiary on the total tax liability of the agricultural entity, including the determination of the transfer price, the application of the arm's length principle and decisions about the most suitable legal form of the subsidiary.

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 Will International Rules on Subsidies Disrupt the World Trading System?

2006 ◽  
Vol 96 (3) ◽  
pp. 877-895 ◽  
Author(s):  
Kyle Bagwell ◽  
Robert W Staiger
Keyword(s):  
Market Access ◽  
Formal Analysis ◽  
Trading System ◽  
Domestic Production ◽  
Multilateral Trading System ◽  
The World ◽  
World Trading System ◽  
The Creation ◽  
The Impact ◽  
The Multilateral Trading System

We provide a first formal analysis of the international rules that govern the use of subsidies to domestic production. Our analysis highlights the impact of the new subsidy disciplines that were added to GATT rules with the creation of the WTO. While GATT subsidy rules were typically viewed as weak and inadequate, our results suggest that the key changes introduced by the WTO subsidy rules may ultimately do more harm than good to the multilateral trading system by undermining the ability of tariff negotiations to serve as the mechanism for expanding market access to more efficient levels.

Charting Taiwan's Technological Future: The Impact of Globalization and Regionalization

1996 ◽  
Vol 148 ◽  
pp. 1196-1223 ◽  
Author(s):  
Denis Fred Simon
Keyword(s):  
Multinational Companies ◽  
Trade Association ◽  
Economic Welfare ◽  
The European Union ◽  
The North ◽  
National Competitiveness ◽  
Political Forces ◽  
The World ◽  
Production And Distribution ◽  
The Impact

There is now general agreement among observers of international economic and technology affairs that the world has entered a period characterized by the interplay of two potent and possibly dialectical forces - globalization and regionalization. Globalization, which is clearly manifested in the changing nature of competition in industries ranging from textiles to telecommunications, is being driven by a combination of diverse forces, including the communication and transportation revolutions, the growing trends towards liberalization, privatization and deregulation, and the rapid diffusion of technologies around the world. Multinational companies (MNCs) have become the principal purveyors of globalization as they seek out new markets and search the world for access to critical R D, production and distribution assets irrespective of where they may be found. Regionalization, on the other hand, has primarily been driven by macro-political forces, with governments as the initiating agents, as in die case of the formation of the European Union and the North American Free Trade Association. Where regionalization is driven by explicit and overt government actions and policies it can more often than not be seen as an anathema to globalization; politicallyinduced regionalization in these cases is driven, in large part, by concerns about loss of national competitiveness and a decline in economic welfare.

scholarly journals Experimental Evidence on Transfer Pricing

2016 ◽  
Vol 50 (1) ◽  
pp. 27-48 ◽  
Author(s):  
Quoc H. Tran ◽  
Rachel T. A. Croson ◽  
Barry J. Seldon
Keyword(s):  
Transfer Pricing ◽  
Tax Rates ◽  
Optimal Transfer ◽  
Policy Interventions ◽  
Economics Experiments ◽  
Theoretical Predictions ◽  
Transfer Prices ◽  
Partial Ownership ◽  
Tariff Rates ◽  
The Impact

Abstract We use incentivized economics experiments to test both the point predictions and comparative static predictions of optimal transfer pricing models, comparing behavior under varying conditions, including wholly versus partially-owned subsidiaries and different tariff and tax rates. As predicted, we find that transfer prices are responsive to relative tax and tariff rates as well as ownership proportions. Additionally, we examine convergence and learning in this setting. While individuals do not choose optimal transfer prices, their choices converge to optimal levels with experience. This paper thus makes two important contributions. First, by comparing behavior with theoretical predictions it provides evidence of whether (and when) individuals set transfer prices optimally. Second, by comparing behavior under conditions of full and partial ownership it provides evidence on the impact of policy interventions (like regulating ownership proportions by MNEs) on tax revenues.

Book Reviews

2010 ◽  
Vol 48 (3) ◽  
pp. 781-786
Keyword(s):  
Climate Change ◽  
London School ◽  
New Era ◽  
The World ◽  
The Creation ◽  
Reduce Emissions ◽  
London School Of Economics ◽  
The Impact ◽  
Research Institute

Gary Yohe of Wesleyan University reviews “The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity” by Nicholas Stern,. The EconLit Abstract of the reviewed work begins “Considers how to create a global deal to take action to reduce the impact and damage of climate change in the world. Discusses why there is a problem and how we can deal with it; the dangers; how emissions can be reduced, and at what cost; adapting to climate change; ethics, discounting, and the case for action; policies to reduce emissions; individuals, firms, communities--the power of example; the structure of a global deal; building and sustaining action; and a planet in peril. Stern is IG Patel Chair in Economics and Government and Chair of the Grantham Research Institute on Climate Change at the London School of Economics. Bibliography; index.”

scholarly journals TAX MORALITY: EXAMINING THE BEPS DEBATE, WORK OF THE OECD AND ITS IMPACT ON AFRICA

2017 ◽  
Author(s):  
Daniel Godson Olika
Keyword(s):  
Multinational Corporations ◽  
Transfer Pricing ◽  
Tax Rates ◽  
Profit Shifting ◽  
The Public ◽  
Pricing Rules ◽  
Planning Strategies ◽  
International Tax ◽  
Harsh Criticism ◽  
The Impact

International tax issues have never been at the forefront of international politics as they are today. This is due in large part to the realization that the current international tax system in existence allows multinational corporations to plan their taxes in such a way that they will be able to pay little or no taxes at all. They are able to do this through certain loopholes and gaps that currently exist in the system. These loopholes and gaps are seen as creating opportunities for taxpayers who are involved in cross-border activities to aggressively structure their activities to mitigate potential tax exposure or achieve no tax liabilities. They do this by exploiting; the hybrid-mismatch arrangements, shortcomings of the transfer pricing rules in jurisdictions where they operate and shifting profits from countries where their profits are made to countries with low tax rates. Consequently, some multinationals pay as little as five percent in corporate taxes, even as smaller domestic businesses pay up to 30 percent. The result of this activity is what is known as; base erosion and profit-shifting (BEPS) and it has the potential to deprive all countries of significant tax revenues. This rave debate and harsh criticism from the public influenced the intervention of the Organisation for Economic Co-operation and Development (OECD) to start its now famous BEPS Project. The OECD BEPS Project aims to provide governments or tax administrators with clear international solutions for fighting aggressive corporate tax planning strategies that artificially shift profits to locations where they are subjected to more favourable tax treatment. This paper shall address the various strands of the BEPS debate, the OECD BEPS project, the impact of the project in Africa and Nigeria. The next section shall address the various strands of the debate.

scholarly journals Globalization and localization: The formation of the technology innovative development

2020 ◽  
Vol 74 ◽  
pp. 02005 ◽  
Author(s):  
Natalya Gagulina ◽  
Irina Zhulega ◽  
Alexandr Samoylov
Keyword(s):  
Global Economy ◽  
Multinational Companies ◽  
High Tech ◽  
Innovative Development ◽  
Cluster Policy ◽  
Resource Potential ◽  
Systematic Analysis ◽  
Technological Factors ◽  
The World ◽  
The Impact

Future of the global economy depends more and more on possibilities and restrictions of innovative development. In the classical interpretation economic development is limited by non-renewable nature of a significant part of the natural resource potential and assimilation abilities of the environment. In opposition, it’s safe to say that the impact of innovative-technological factors, based on scientific, educational and information revolutions, powered by the synergic effect of the partnership of civilizations, is rising. The aggravation of this global contradiction forces countries, regions and enterprises around the world to look for additional ways to increase competitiveness and efficiency. One of the possible ways to solve this problem is the development of cluster policy – both on the part of the state and on the part of business, large multinational companies. The article analyzes the possibility of formation of technology of innovative development of the region through the competent implementation of cluster policy. The authors conducted a systematic analysis of the effects of clustering (localization), concentrated in the field of high-tech industries, identified problems of their development, including those in the context of globalization.

Regulatory Institutions and Multinational Companies in Emerging Markets

2018 ◽  
pp. 266-290
Author(s):  
Farok J. Contractor
Keyword(s):  
Institutional Environment ◽  
Free Market ◽  
Multinational Companies ◽  
Government Policies ◽  
Local Market ◽  
Role Of Government ◽  
Fdi Inflows ◽  
Emerging Nations ◽  
The Impact

This chapter discusses the role of government policies in fostering, or inhibiting, foreign direct investment (FDI) by multinational companies in emerging nations. Using World Bank data on 149 emerging nations, the chapter examines the impact of government policies and institutions on the magnitude of inward FDI each country receives. Certainly, socioeconomic factors such as the size of the local market, human capital, and skills remain powerful determinants of FDI flows. But, ceteris paribus, the results show that the institutional environment does plays a substantial role in determining the magnitude of FDI inflows received by a nation. Globalization, measured by FDI as well as trade, data, and people flows, is cyclical. But all in all, globalization has seen a massive increase since the 1980s, when a sea change occurred in government policies toward international business. Formerly socialist and inward-oriented policies were almost universally replaced by a liberal free-market posture.

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