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 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...

Multinational groups (MNGs) produce a major part of global output. Further, a substantial fraction of international transactions happens to be internal, i.e., intermediate products and services are traded between group members. Thus, the problem of co-ordinating economic decisions like...

For mitigating the problems of transfer pricing formula apportionment (FA) is discussed intensively. However, FA could even be more harmful than transfer pricing because income shifting would require changing economic decisions instead of just taking advantage of accounting options. We analyze...

Advance Pricing Agreements (APAs) are commonly used by multinational groups to gain certainty about their transfer prices for tax purposes. I focus on a multinational company that invests in a foreign subsidiary in a low-tax country. Applying a binomial model for flexible investment planning, I...

The main focus of this paper is on the international transfer pricing issues encountered by multinational enterprises (MNE) and the countries they do business in. This paper explores how the conflicting interests of MNEs and the countries they do business in affects each party's bottom line, tax...

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 chapter from a Practical Guide to Transfer Pricing (Lexis) compares the U.S. Section 482 transfer pricing regulations to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as revised in 2010. Section 482's purpose is to ensure that taxpayers subject...

This paper examines transfer pricing in general. First, three different approaches to transfer pricing options and their advantages and disadvantages are investigated. Based on the analysis, it is difficult to make recommendations on the best transfer pricing methods. Next, the international...