Transfer Pricing – between Optimization and International Tax Evasion

Valentin Sava () and Manuela Violeta Tureatca ()
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Valentin Sava: University Dunarea de Jos Galati”, Galati, România
Manuela Violeta Tureatca: The Romanian Academy, ” INCE Kiritescu”, Bucuresti, Romania

Proceedings RCE 2017, 2017, 605-617

Abstract: Each enterprise in the private sector aims to increase financial return, which is achieved by obtaining a the higher net profit by increasing revenue and reducing expenditure. In this endeavor, compliance with tax obligations occupy a very important role because handling taxes may lead to an increase in revenue and / or a reduction of spending, and this action is called tax optimization. In the case of multinational companies, the main tool that can be used to lower the tax burden and increasing, sometimes in sizeable benefits in net, is the transfer prices or the prices they registered entities in the group transactions between them, along with another instrument with great impact, ie tax havens. Tax evasion, designating evading payment obligations of a company according to the national tax system, may be legal in the sense that tax optimization does not violate the rules, but exploiting loopholes that are in them. But when legal tax rules are violated, we deal with tax fraud, which will be subject to punitive measures by public authorities as it affects the whole population.

Keywords: transfer pricing; tax haven; multinational society; globalization; tax evasion and fraud. Title of Book: Risk in Contemporary Economy (search for similar items in EconPapers)
JEL-codes: A23 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:lum:progal:v::y:2017:i::p:605-617

DOI: 10.18662/lumproc.rce2017.1.51

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