Tax-Motivated Transfer Pricing and Country-by-Country Reporting: Evidence from Japanese Customs Data

Makoto Hasegawa, Takafumi Kawakubo, Takafumi Suzuki and Masayoshi Hayashi
Additional contact information
Takafumi Kawakubo: Osaka School of International Public Policy, the University of Osaka
Takafumi Suzuki: Faculty of Business, Aichi Shukutoku University
Masayoshi Hayashi: Faculty of Economics, the University of Tokyo

No CIRJE-F-1266, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Using Japanese firm-level customs data from 2014 to 2019, we investigate profit shifting through transfer pricing by Japanese multinational corporations. We find that Japanese firms reduce related-party export prices relative to arm's-length prices as the tax differentials between Japan and destination countries widen, indicating tax-motivated transfer pricing. The responsiveness of related-party prices to these taxdifferentials is, on average, smaller than that reported in previous studies but varies depending on transaction characteristics. Specifically, transfer mispricing is more pronounced in transactions involving larger parent-affiliate pairs and products that are exported less frequently. We also examine the impact of the country-by-country reporting (CbCR) system, introduced in Japan in 2016, and find no evidence that it reduced transfer mispricing by Japanese multinationals subject to CbCR.

Pages: 24 pages
Date: 2026-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cirje.e.u-tokyo.ac.jp/research/dp/2026/2026cf1266.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2026cf1266

Access Statistics for this paper

More papers in CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by CIRJE administrative office ().