We characterize the effects of different methods of taxing multinational income on productive efficiency in a competitive equilibrium. The efficient outcome is achieved when every firm that produces and sells domestically faces the same tax rate as a multinational firm selling into the same...

We study the economic effects of unilateral adoption of corporate tax policies that include destination-based taxes and/or cash ow taxes in a heterogeneous agent model in which multinational firms can endogenously shift income between countries using transfer prices. Standard pass through...

The Indian Goods and Services Tax (GST) regime recently replaced the earlier laws providing for tax on supplies of goods and services. Under the new regime, transfer pricing rules have been introduced, which were virtually non-existent earlier. The GST regime insists on arm's length pricing in...

This paper generalizes the standard transfer pricing concept of implicit support flowing from a parent company to its subsidiary. The first extension is to assume that implicit support might be ve or -ve for the recipient. The second is to consider the possibility of implicit support flowing...

This study analyzes the impact of transfer pricing on multinational enterprises' R&D investment decisions. Specifically, I examine the effects of two commonly used contract designs to exchange and develop intangible assets across group affiliates: licensing and cost sharing agreements. Whilst...

In most jurisdictions there are three separate spheres of transfer pricing analysis - income tax, customs and VAT. Although they share policy objectives, terminology and frequently borrowing methodologies from one another these domestic transfer pricing systems are not in harmony. Businesses...

This paper investigates regulation on corporate income taxation with multinationals and transfer pricing. We recommend full cooperation within the EU if profit shifting costs are sufficiently low and cannot be influenced to a large extend. Otherwise, high profit shifting costs or the potential...

This paper demonstrates that under conditions of imperfect (oligopolistic) competition, a transition from separate accounting (SA) to formula apportionment (FA) does not eliminate the problem of profit shifting via transfer pricing. In particular, if affiliates of a multinational firm face...

This paper analyzes transfer pricing incentives under a destination-based and an origin-based VAT system. While a switch to the origin-based VAT may moderate or reinforce the incentive for transfer pricing induced by income tax differentials, we show that in the case of the EU this switch tends...