The Transfer Pricing Problem: When Multinational Corporations Shift Profits Across International Borders

Tebogo, Baitshepi

doi:10.2139/ssrn.1899014

Cited by 5 publications

(9 citation statements)

References 5 publications

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“…Transfer pricing agreements allow firms to redistribute profits among business units of a single firm by charging favorable prices for goods or services sold to each other: Oftentimes, transfer pricing is used to shift profits ''from higher tax countries to lower tax regimes'' (Tebogo 2011;McClearn 2012McClearn /2013. Part of the OECD's BEPS Action Plan is to develop transfer pricing documentation rules to enhance tax administration transparency.…”

Section: Tax Rates and Bepsmentioning

confidence: 99%

Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality

2015

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This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer ''a way out'' of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes. This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity's tone at the top. The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report.

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Section: Tax Rates and Bepsmentioning

confidence: 99%

Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality

2015

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“…Arm's length principle states that requires associated enterprises to charge the same prices, royalties and other fees concerning a controlled transaction that would be charged by independent parties in an uncontrolled transaction is otherwise comparable circumstances. Hence, it is the condition or the fact that the parties to a transaction are independent and on an equal footing (Tebogo, 2011).…”

Section: Introductionmentioning

confidence: 99%

“…Transaction transfer pricing helps incorporate organizations' decision-making structures which include the reduction in corporate income tax payments or duties and transferring income from countries with bans or limitations on profit repatriation (Tebogo, 2011). The corporate organizations' policy regarding transaction transfer pricing is based on many factors, such as the fiscal aspects of countries involved in the cross-border activity of member companies of the group, the currency legislation, the political and economic risks and the price level in the host country among others.…”

Section: Introductionmentioning

confidence: 99%

Influence of Transaction Transfer Pricing Policies on Corporate Organizations Tax in Nigeria

2020

RJFA

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This study aimed to discuss the influence of transaction transfer pricing on corporate organizations tax in Nigeria. A descriptive research model was adopted. Secondary data were obtained from KPMG International (Tax) Bulletin report on fifty (50) major corporate organizations in Nigeria for 2014 to 2018 concerning transaction transfer pricing policies in terms of its influence on the organizations' business growths, tax rate, profit rate and tax liability. Results obtained for the study showed that transaction transfer pricing policies have a positive influence on the business growth on corporate organizations in Nigeria. It was recommended that corporate organizations should employ adequate measure that safeguards and avoid costly error in the implementation of transaction transfer pricing policies.

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“…(1) Variable cost-based transfer pricing is based on the total variable costs incurred by the selling unit, which include direct labour, direct materials and variable overhead (Hunt & Fowler, 2009). When the variable cost-based transfer pricing approach is applied, the selling division will always make a loss equal to its fixed costs of production (Tebogo, 2011). The major benefit of this approach is that it encourages prospective buying divisions to purchase goods and services internally, as the transfer price is lower than external market prices.…”

Section: Cost-based Transfer Pricingmentioning

confidence: 99%

“…(2) Full cost-based transfer pricing is based on the total cost of the provider's product and is equivalent to the variable costs plus fixed costs per transfer unit (Colbert & Spicer, 1998). A full cost-based transfer price includes costs from other relevant business functions within the division (commonly referred to as overhead), such as research and development, design, marketing, distribution and customer service (Tebogo, 2011). The major benefits of this approach are simplicity of use (as the data is already available and easily understood) and it puts the selling division in a position to cover all production costs incurred (Colbert & Spicer, 1998;Tebogo, 2011).…”

Section: Cost-based Transfer Pricingmentioning

confidence: 99%

Activity-Based Costing and Inter-District Flows in the New Zealand Public Health Sector

Kesteren¹

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<p>Changes in the New Zealand public health sector in recent years, such as heightened political, economic and social pressures to manage and reduce costs while improving the quality of care in conjunction with stringent health care guidelines, have forced district health boards (DHB) nationwide to reassess their approach to health care provision. This has chiefly involved evaluating current practices or institutions; revising health care systems, including locality of treatment; and assessing established accounting systems and mechanisms (or lack thereof) to understand the source of costs and resource consumption. Acknowledging that patient welfare has always held pre-eminence in the New Zealand public health sector, balancing the dual pressures to enhance the utilisation of limited resources and adhere to social pressures to provide sustained high quality health services has been a difficult exercise for DHBs. In recognition of the potential benefits of activity-based costing (ABC), and the fact that the New Zealand public health sector is severely underrepresented in current literature, this multi-site case study examines how sophisticated costing systems (such as ABC), are being used by DHBs. Using an institutional theory framework, this study posits that DHBs will use sophisticated costing systems to (1) improve cost understanding with the goal of managing and reducing their costs; and (2) contribute to more informed National Prices for Inter-District Flows (IDF), the aim of which is to plan and provide services to meet the directives and outcomes outlined by the Ministry of Health. Overall, the findings are compelling and reveal that costing systems are used on three levels to plan and provide health services, including unsophisticated costing systems that are not formally recognised; moderately sophisticated costing systems (such as CostPro) that are formally recognised; and sophisticated costing systems (such as PPM) that are formally recognised. Furthermore, the findings reveal that DHBs with sophisticated costing systems generate event-level information, which directly influences the calculation of National Prices for IDFs. The findings of this exploratory study also indicate a need to examine the nexus between ABC and IDFs in a New Zealand public health sector context further.</p>

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The Transfer Pricing Problem: When Multinational Corporations Shift Profits Across International Borders

Cited by 5 publications

References 5 publications

Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality

Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality

Influence of Transaction Transfer Pricing Policies on Corporate Organizations Tax in Nigeria

Activity-Based Costing and Inter-District Flows in the New Zealand Public Health Sector

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