Knocking on Tax Haven’s Door: Multinational Firms and Transfer Pricing

Ronald Davies, Julien Martin, Mathieu Parenti () and Farid Toubal

The Review of Economics and Statistics, 2018, vol. 100, issue 1, 120-134

Abstract: This paper analyzes the transfer pricing of multinational firms. Intrafirm prices may systematically deviate from arm’s-length prices for two motives: pricing to market and tax avoidance. Using French firm-level data on arm’s-length and intrafirm export prices, we find that the sensitivity of intrafirm prices to foreign taxes is reinforced once we control for pricing-to-market determinants. Most important, we find no evidence of tax avoidance if we disregard tax haven destinations. Tax avoidance through transfer pricing is economically sizable. The bulk of this loss is driven by the exports of 450 firms to ten tax havens.

Date: 2018
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Related works:
Working Paper: Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing (2018)
Working Paper: Knocking on Tax Haven’s Door: multinational firms and transfer pricing (2015)
Working Paper: Knocking on Tax Haven?s Door: Multinational Firms and Transfer Pricing (2015)
Working Paper: Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing (2014)
Working Paper: Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing (2014)
Working Paper: Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing (2014)
Working Paper: Knocking on Tax Haven’s Door: Multinational Firms and Transfer Pricing (2014)
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