Transfer pricing rules and corporate tax competition

• 成果类型: Article; Proceedings Paper
• 署名作者: Elitzur, R; Mintz, J
• 署名单位: University of Toronto
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/0047-2727(95)01558-2
• 发表日期: 1996
• 页码: 401-422
• 关键词: Corporate taxation; transfer pricing

摘要

A multinational parent sells a non-marketed commodity to a foreign subsidiary that uses the product as an input to produce a product it then sells. The subsidiary is controlled by a local managing partner whose compensation consists of a lump-sum payment plus a share of the subsidiary's profit. The parent chooses an optimal transfer price taking into account incentives for the subsidiary's managing partner and taxes. Home and host governments impose corporate income taxes on the parent and subsidiary's respective profits subject to a transfer pricing rule (e.g. cost plus price method or comparable profit method). A Nash equilibrium is derived for effective tax rates chosen by home and host governments. We then examine harmonization and suggest that tax rates would be reduced.