Effect of Transfer Pricing on Profit Shifting by Multinational Companies in Developing Countries: A Case of Rwanda

Twesige, Daniel; Gasheja, Faustin; Barayendema, Jonas; Uwamahoro, Alexis

doi:10.1007/978-981-15-5046-1_9

Cited by 3 publications

(2 citation statements)

References 17 publications

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“…Tests on the determinants of profit shifting by multinational companies in Rwanda have been carried out through empirical analysis of a sample of 72 multinational companies, the large taxpayers. The results of this study indicate that profit shifting is strongly influenced by finance costs and intra-group transactions or services as the biggest determining factors [2].…”

Section: Introductionmentioning

confidence: 82%

Benefit Test Analysis on Intra-Group Services Transactions in Indonesia

Nofita¹,

Nuryanah²

2022

Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 Jul

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Intra-group transaction of services between affiliated companies is one of the transactions that has a high transfer pricing risk. This research is motivated by a dispute between taxpayers and the tax authorities in Indonesia related to testing the economic benefits of intra-group service transactions. The benefit test is one of the requirements that must be met by the taxpayer in order to fulfill the arm's length principle. Taxpayers must prove the existence of economic benefits that can add value to the provision of these services. The purpose of this study is to analyze the quality of information of transfer pricing documentation related to the benefits of intra-group transaction services in order to meet the arm's length principle, and identify the ideal quality of information that should be presented in the document. The researcher conducted a content analysis of the summary of information related to the intra-group service benefit test in 147 taxpayer transfer pricing documentation for the period 2017 to 2019, by comparing them with the regulations in Indonesia. Furthermore, the researcher confirmed the findings of the content analysis to the Tax Authorities and Tax Consultants through the interview process. The results of this study indicate that most of documentation in this study does not explain in detail about testing the benefits of intra-group services. Transfer pricing documentation should be described in detail so that can minimize information asymmetry between the authority and the taxpayer and also reduce the risk of disputes. This study has implication that the taxpayers need to provide adequate documentation in testing the economic benefits of intra-group services to reduce tax disputes. For regulators, this research has implications for clarifying benefit testing in transfer pricing documentation reports and the concept of economic benefits.

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Section: Introductionmentioning

confidence: 82%

Benefit Test Analysis on Intra-Group Services Transactions in Indonesia

Nofita¹,

Nuryanah²

2022

Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 Jul

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“…In its natural and ideal sense, good financial performance is essential for any firm to operate smoothly. This is needed since all firms across the globe have limited resources, which makes it imperative for them to perform well financially, or else they will perish from a lack of surplus inflow of resources (Twesige & Gasheja, 2020). This ideology applies to all firms, including the airlines.…”

Section: Introductionmentioning

confidence: 99%

Effect of Ownership Structure on Financial Performance: Evidence from Listed Airlines in Africa

Makoka,

Swai,

Ngollo

et al. 2023

J. Theor. Appl. Manage.

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Objective: This study empirically examines the impact of ownership structure on the financial performance of listed airlines in Africa. Design/Methods/Approach: The research utilized quantitative techniques to collect secondary data from listed airlines over ten years (2010-2019). Descriptive statistics and multiple regression were used for analysis. Findings: The results revealed that airlines with the majority of private domestic and private foreign ownership showed a significant positive effect on financial performance (ROA and ROE). In contrast, state ownership had an insignificant impact on airlines' financial performance. The study supports the property rights theory, emphasizing the importance of private ownership in airlines. Originality/Value: This study adds to the existing literature by providing evidence on how ownership structure influences financial performance in African airlines, contributing to aviation research. Practical/Policy Implication: The findings suggest that private and foreign investors should consider acquiring controlling airline stakes to enhance financial performance. Policymakers should aim to create flexible laws and regulations that attract domestic and foreign private investors to the aviation sector, potentially fostering improved management practices and policy developments.

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Conceptualising the Behaviour of MNEs, Tax Authorities and Tax Consultants in Respect of Transfer Pricing Practices – A Three-Layer Analysis

Wealth

Smulders

Mpofu

2023

Accounting, Economics, and Law: A Convivium

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This study explores the decision-making behaviour of economic actors in relation to transfer pricing by applying a three-layer practice theory. A critical review of the literature using snowball sampling and a thematic analysis of interview data from the Ministry of Finance, tax consultants and the Zimbabwe Revenue Authority bring to light novel conceptualisations and perspectives on the transfer pricing phenomenon. This study addresses scholarly gaps by exploring a confluence of legal, implementation and exploitative dimensions in transfer pricing regulation. The study also makes a novel contribution by proposing a model that could be useful to policymakers and tax authorities in ameliorating tax avoidance through transfer pricing.

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Effect of Transfer Pricing on Profit Shifting by Multinational Companies in Developing Countries: A Case of Rwanda

Cited by 3 publications

References 17 publications

Benefit Test Analysis on Intra-Group Services Transactions in Indonesia

Benefit Test Analysis on Intra-Group Services Transactions in Indonesia

Effect of Ownership Structure on Financial Performance: Evidence from Listed Airlines in Africa

Conceptualising the Behaviour of MNEs, Tax Authorities and Tax Consultants in Respect of Transfer Pricing Practices – A Three-Layer Analysis

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