Taxation of Income of Multinational Corporations: The Case of the United States Petroleum Industry

Jenkins, Glenn P.; Wright, Brian D.

doi:10.2307/1937857

Cited by 25 publications

(20 citation statements)

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“…Many empirical studies (such as Lall 1973;Jenkins and Wright 1975;Kopits 1976;Bernard and Weiner 1990;Grubert and Mutti 1991;Hines and Rice 1994;and Collins, Kemsley, and Lang 1996) have estimated the magnitude of tax-induced transfer pricing. Due to data limitations, the evidence is necessarily indirect, but most studies indicate that transfer prices are likely to be influenced by tax considerations.…”

Section: The Impact Of Tax Minimization Strategies On Intrafirm Tradementioning

confidence: 99%

The Impact of Transfer Pricing on Intrafirm Trade

Clausing¹

1998

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Section: The Impact Of Tax Minimization Strategies On Intrafirm Tradementioning

confidence: 99%

The Impact of Transfer Pricing on Intrafirm Trade

Clausing¹

1998

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“…If firms use transfer prices to manipulate income, reported customs values should rise and fall with changes in tax incentives. I study the years 1981 to 1988 since they capture a period when the U.S. and many of its trade 1 Bernard and Weiner (1990) find little evidence of transfer pricing in the oil industry, while Jenkins and Wright (1975) come to the opposite conclusion. Since oil is a homogenous product when classified by grade, the scope for transfer pricing is reduced.…”

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confidence: 99%

Tax Reforms and Evidence of Transfer Pricing

Swenson

2001

National Tax Journal

177

113

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Abstract:The manipulation of transfer prices changes the relative tax burdens multinational firms face in their different countries of operation and may even reduce a firm's worldwide tax payments. At the same time, transfer price manipulation will often trigger changes in the tariffs that are levied on intra-company imports. For this reason, when tax rates change, as they did for many countries during the 1980's, the incentive to manipulate transfer prices varies substantially across products. I use product-level variation in tariff duties to help me identify transfer pricing in products imported to the U.S. My empirical results indicate that reported customs values of U.S. imports from Canada, France, Germany, Japan and the U.K. were consistent with the transfer pricing incentives created by taxes and tariffs. While the results are statistically significant, they are economically small, implying that a 5 percent reduction in foreign corporate tax rates will cause the reported price of affiliated firm imports to rise by a mere 0.024%. The meaning of these results and the implied value of transfer pricing penalties are explored.

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“…As before, since M N E j can anticipate M N E i 's behavior by observing tax rates, its best response will be to lower its home sales and raise its exports to country i. 17 17 When ti > tj (ti < tj), we can reach the same conclusion by using the argument that a…”

Section: Strategic Effect Of Corporate Profit Tax Ratesmentioning

confidence: 84%

“…We also refer the reader to Gresik (2001) and Gordon and Hines (2002) for an overview of the theoretical literature on international taxation and of its connections with empirical observations. 2 See, e.g., Jenkins and Wright (1975), Grubert and Mutti (1991), Harris et al (1993), Grubert, Goodspeed and Swenson (1993), Hines and Rice (1994). 3 Her estimates indicate that a tax rate 1 percent lower in the country of destination (origin)…”

Section: Introductionmentioning

confidence: 99%

Investment Liberalization and the Geography of Firm Location

Amerighi¹

2008

Foreign Direct Investment and the Multinational Enterprise

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We set up a symmetric two-country model with two multinationals competing on the quantities and possibly manipulating their transfer prices.Governments choose both the corporate profit tax rate and the level of enforcement of the "arm's length" principle. We show that stronger enforcement increases equilibrium tax rates. We also find that a larger international ownership of multinationals leads to a "race to the top" in both policies between the two countries, while trade liberalization initially implies a "race to the bottom". But as trade becomes free enough, a further decrease in trade costs raises equilibrium tax rates and enforcement policies.

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Taxation of Income of Multinational Corporations: The Case of the United States Petroleum Industry

Cited by 25 publications

References 0 publications

The Impact of Transfer Pricing on Intrafirm Trade

The Impact of Transfer Pricing on Intrafirm Trade

Tax Reforms and Evidence of Transfer Pricing

Investment Liberalization and the Geography of Firm Location

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