Perceived Fairness in the Taxation of a Digital Business Model

Fairness und die Besteuerung digitaler Geschäftsmodelle

Stefan Greil (), Christian Schwarz () and Stefan Stein ()
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Stefan Greil: University of Hamburg
Christian Schwarz: Department of Economics of the Duesseldorf University of Applied Sciences
Stefan Stein: Quantum Steuerberatungsgesellschaft mbH

Duesseldorf Working Papers in Applied Management and Economics from Duesseldorf University of Applied Sciences

Abstract: The “fair” taxation of digital business models is challenging. One of the key aspects – both policy makers and the public opinion consider as most pressuring – is the determination of intragroup transfer prices for intangibles used in digital business models. In this paper, we address the issue of a “perceived fair” taxation of the digital economy in the light of the arm’s length principle based on a survey with transfer pricing experts. The aim of the survey is not to estimate arm’s length profit allocations but rather to elicit fairness considerations in different transfer pricing related scenarios. In a digital economy framework where arm’s length profits are distributed extremely inequitably, subjects perceive this distribution of profits as most unfair compared to more balanced scenarios. Consequently, subjects propose a “fair” distribution of profits that substantially differs from the exogenously given arm’s length allocation. In scenarios with a more balanced arm’s length allocation of profits, we find that the perceived fairness for the expert groups increases while a control group of business students is almost not influenced by the arm’s length allocation of profits.

Keywords: arm's length principle; corporate income tax; fairness; profit-shifting; Fremdvergleichsgrundsatz; Gewinnverlagerung; Unternehmensbesteuerung; digitale Geschäftsmodelle (search for similar items in EconPapers)
JEL-codes: D90 F23 H25 H26 K34 (search for similar items in EconPapers)
Pages: 27 pages
New Economics Papers: this item is included in nep-hme, nep-law and nep-pay
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Published in Forschungsberichte des Fachbereichs Wirtschaftswissenschaften der Hochschule Duesseldorf, 2018,47 ISSN 2365-3361

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Persistent link: https://EconPapers.repec.org/RePEc:ddf:wpaper:47

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