Multiple roles of transfer prices: One vs. two books

Nielsen, Søren Bo & Raimondos-Møller, Pascalis (2012) Multiple roles of transfer prices: One vs. two books. In Schön, Wolfgang & Konrad, A. Kai (Eds.) Fundamentals of International Transfer Pricing in Law and Economics. Springer, Berlin, Heidelberg, pp. 25-46.

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This paper investigates multiple roles of transfer prices for shipments of goods and services between entities of a multinational enterprise. At the center is the role of transfer pricing (TP) in tax manipulation, but other roles having to do with internal operations or strategic delegation, etc. are also considered. The interesting question is to what extent and how the different roles of TPs interfere with each other. The answer depends on whether companies use one or two books, i.e. whether they (can) apply different TPs for different purposes. We illustrate, in a stylized model, the competing aims of tax manipulation and strategic delegation. Finally, we briefly look at selected reform proposals, concluding that either TP problems are not addressed, or else new distortions will be introduced instead.

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ID Code: 94025
Item Type: Book Chapter
DOI: 10.1007/978-3-642-25980-7_3
ISBN: 9783642259807
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Deposited On: 03 Apr 2016 23:36
Last Modified: 15 Apr 2016 06:19

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