Abusive Transfer Pricing and Economic Activity

Søren Nielsen, Dirk Schindler and Guttorm Schjelderup

No 4975, CESifo Working Paper Series from CESifo

Abstract: We demonstrate that the choice of the transfer price and its effect on intra-firm trade and investment depends on the probability of detection and thus on the measure, on which tax authorities base their audit. A policy implication of the paper is that it should be preferable to condition audits on the amount of income shifted rather than on the distortion of the transfer price proper. Another policy finding is that improving the quality of tax law might be superior to higher detection effort. The former reduces profit shifting and concealment effort, whereas the latter leads to more wasteful use of resources on concealment and has an ambiguous effect on profits shifted.

Keywords: transfer pricing; investment; concealment costs; economic activity (search for similar items in EconPapers)
JEL-codes: H25 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp4975.pdf (application/pdf)

Related works:
Working Paper: Abusive Transfer Pricing and Economic Activity (2014)
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:ces:ceswps:_4975

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().