International Transfer Pricing and Tax Avoidance: Evidence from Linked Trade-Tax Statistics in the UK

Guo, Dongxian; Liu, Li; Schmidt‐Eisenlohr, Tim

doi:10.2139/ssrn.3025275

Cited by 7 publications

(2 citation statements)

References 17 publications

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“…On balance, it seems more likely that any transfer pricing involving UK legal entities would be to reduce income, given the existence of other lower tax jurisdictions. Liu et al (2017) reported on this practice specific to the UK, i.e., that incomes may be under reported. Lower transfer prices would equally reduce revenue, which would at the same time decrease the markup.…”

Section: Data Veracitymentioning

confidence: 99%

The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100

Hackworth

2024

JRFM

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Price markups and firms’ Tobin’s Q ratios are widely believed to have been increasing in the past several decades. Various models for the calculation of price markups have been developed, each relying on the historically held definition of the ratio of price to marginal cost; however, all of these have methodological drawbacks, and some of the results they have produced have been poorly reflective of the near past wider macroeconomic experience. This paper defines a new approach for the definition and measurement of markup pricing, and it also avoids some of the issues surrounding the marginal cost approaches by using the measure of economic rent and the capital asset pricing model. The results show limited markup pricing for the UK’s FTSE 100 companies (2018–2023), but that certain real estate, technology/media and financial services/equity investment firms have enjoyed higher price markup levels. An analysis of the business models of these firms is used to qualitatively propose explanations for such markups. This work offers formal proof that that the expected price markup is equal to Tobin’s Q and finds that the empiric market level of markup is near equivalent to the market Tobin’s Q; the differences between the markup and Tobin’s Q at the level of the firm are equally assessed. This work challenges the general consensus that price markups are above one and have been increasing; it may also aid policy makers with respect to taxation policy and regulatory measures, as well as the financial management of firms in decisions concerning capital deployment and portfolio management. The method merits expansion to wider data sets, as well as to those from outside of the UK.

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Section: Data Veracitymentioning

confidence: 99%

The Current and Expected Pricing Markup as Derived from the Capital Asset Pricing Model and Tobin’s Q and Applied to the UK’s FTSE 100

Hackworth

2024

JRFM

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“…This indicates that transfer pricing schemes are becoming so important in determining transfer prices globally (OECD, 2012). The complexity and the high volume of transactions in a group of MNE make tax authorities pay special attention considering that transfer pricing schemes in MNE are identified as having a great risk of tax evasion (Liu et al, 2017;Sebele-Mpofu et al, 2021;Sikka & Willmott, 2010).…”

Section: Pendahuluanmentioning

confidence: 99%

A qualitative analysis on transfer pricing tax audit performance in Indonesia

Zulfiqar,

Ulupui,

Respati

2023

AKURASI

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This study is qualitative research using inductive reasoning through documentation and literature studies. The finding showed seven areas of dispute: gross income-related items, purchase cost, intra-group services, royalty, dividend, interest expense, and interest income. Furthermore, it concluded that documentation, comparable data, and comparability method were the three main issues in transfer pricing disputes. Ultimately, it showed that the tax court decree was dominated by decrees that favored taxpayers’ appeals. Public interest statement Tax disputes are known for their lengthy and costly process, but in the end, it turned out that the taxpayers mostly won the cases. To that end, this paper seeks to analyze the transfer pricing audit performance in Indonesia based on 2021’s Tax Court Decree. This allows us to know what factor(s) contributed to the transfer pricing dispute and how the tax court settled the dispute. As a practical implication, it is suggested that state revenue agencies improve the quality of their transfer pricing tax audit performance.

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