Knocking on Tax Haven’s Door: Multinational Firms and Transfer Pricing
By Ronald B. Davies, Julien Martin, Mathieu Parenti, F. Toubal. Review of Economics and Statistics, 2017
280 citations recorded by the source corpus.
Abstract This paper analyzes the transfer pricing of multinational firms. Intrafirm prices may systematically deviate from arm’s-length prices for two motives: pricing to market and tax avoidance. Using French firm-level data on arm’s-length and intrafirm export prices, we find that the sensitivity of intrafirm prices to foreign taxes is reinforced once we control for pricing-to-market determinants. Most important, we find no evidence of tax avoidance if we disregard tax haven destinations. Tax avoidance through transfer pricing is economically sizable. The bulk of this loss is driven by the exports of 450 firms to ten tax havens.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/500f795d3453a30def37110fbdcc78b0c4aaf5d1
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In Accounting
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Citations in the corpus
- INTERNATIONAL CORPORATE TAX AVOIDANCE: A REVIEW OF THE CHANNELS, MAGNITUDES, AND BLIND SPOTS (2018, background): “Later studies provide more direct evidence, showing that the price wedge between the arm's-length price for unrelated transactions and the transfer price for related-party transactions varies systematically with corporate tax rate differentials faced by MNCs in the U.S. (Clausing, 2003; Bernard et a”
- Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms (2019, unknown): “Cristea and Nguyen (2016); Liu, Schmidt-Eisenlohr, and Guo (2017); and Davies et al. (2018) provide detailed analyses of transfer pricing by using tax and trade linked datasets. Second, I show that multinational firms have more intangible assets than domestic firms and the size of profit ratio gap i”
- The heterogeneous impact of Brexit: Early indications from the FTSE (2018, unknown): “8 As can be seen, for the bulk of the period there was no clear dominance of the “remain” or “exit” camps.”