Taxes and Decision Rights in Multinationals

Søren Nielsen, Pascalis Raimondos () and Guttorm Schjelderup

Journal of Public Economic Theory, 2008, vol. 10, issue 2, 245-258

Abstract: We examine how a multinational's choice to centralize or decentralize its decision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in multinational enterprises (MNEs)—here, as a strategic precommitment device and a tax manipulation instrument—we show that centralization is more profitable when tax differentials are large. When tax differentials are small, decentralization can be performed in two different ways each providing the highest profits in a particular range of the tax differential. Hence, the paper emphasizes the organizational flexibility that MNEs have in pursuing tax optimization.

Date: 2008
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Citations: View citations in EconPapers (54)

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https://doi.org/10.1111/j.1467-9779.2008.00360.x

Related works:
Working Paper: Taxes and Decision Rights in Multinationals (2007)
Working Paper: Taxes and Decision Rights in Multinationals (2006)
Working Paper: Taxes and Decision Rights in Multinationals (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:10:y:2008:i:2:p:245-258

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