Transfer pricing or formula apportionment? - Tax-induced distortions of multinationals’ investment and production decisions*-

Abstract

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Multinational transfer pricing of intangible assets: Indonesian tax auditors’ perspectives

“…Borkowski (1997) surveyed government authorities from 47 countries, but did not investigate tax auditors' concerns regarding multinational transfer pricing manipulations. However, Martini et al (2012) find that the parent company exploits the range of arm's length prices to minimize the MNC's tax burden. Similarly, Baldenius et al (2004, p. 608) argue that if firms decouple their internal transfer prices from the arm's length price used for tax purposes, transfer prices would be affected by the differential tax rates and the admissible arm's length prices.…”

“…In the last decades, Indonesia has attracted overseas investors interested in the country's abundant natural resources, lower cost of production, and potential market [1]. Martini et al (2012) find that if MNC is centralized, low-tax country usually attracts higher investment. Cross-border transactions taking place between a parent company and its Indonesian branch or subsidiary increased significantly owing to this remarkable growth in foreign direct investments [2].…”

Real effects of an international tax reform for MNEs

“…However, our results largely depend on the product market characteristics above and beyond the installed tax regime. Our paper also extends Martini et al (2012) who analyze the impact of different combinations of tax allocation and managerial accounting regimes on investment and production decisions under Formula Apportionment (FA). In contrast to them we consider effects of a minimum taxation regime.…”

“…In complete tax base allocation via formula apportionment, which is beyond the scope of this paper, see, e.g. Martini et al (2012).…”

Is there a Real Chance to Adopt the CCCTB without UK Participation in the EU?

“…The five stream of research on the CCCTB is concentrated on the concept of the CCCTB and the prediction of tax revenues for the purpose of a new taxbased own resources to finance the EU budget; this stream includes studies such as Schratzenstaller and Krenek (2019) and Nerudová, Solilová and Dobranschi (2016). The last stream of research on the CCCTB is focused on the issue how the CCCTB is able to reach fair taxation together with the elimination of profit shifting and tax base erosion, such as Valenduc (2019), Hentze (2019), Eichfelder, Hechtner and Hundsdoerfer (2018), de Wilde (2017), Ortmann and Sureth-Sloane (2016), Keser, Kimpel and Oestreicher (2016), Kiesewetter, Steigenberger and Stier (2018) and Martini, Niemann and Simons (2012).…”