At A Cost: the Real Effects of Transfer Pricing Regulations
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Summary:
Unilateral adoption of transfer pricing regulations may have a negative impact on real investment by multinational corporations (MNCs). This paper uses a quasi-experimental research design, exploiting unique panel data on domestic and multinational companies in 27 countries during 2006-2014, to find that MNC affiliates reduce their investment by over 11 percent following the introduction of transfer pricing regulations. There is no significant reduction in total investment by the MNC group, suggesting that these investments are most likely shifted to affiliates in other countries. The impact of transfer pricing regulations corresponds to an increase in the ``TPR-adjusted'' corporate tax rate by almost one quarter.
Series:
Working Paper No. 2018/069
Subject:
Corporate income tax Economic sectors Taxes Thin capitalization rules Transfer pricing Transfer pricing rules Transnational corporations
English
Publication Date:
March 23, 2018
ISBN/ISSN:
9781484347539/1018-5941
Stock No:
WPIEA2018069
Pages:
36
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