The Economics of Advance Pricing Agreements

Johannes Becker, Ronald Davies and Gitte Jakobs ()
Additional contact information
Gitte Jakobs: Institute of Public Economics, University of M\"{u}nster

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: Advance pricing agreements (APAs) determine transfer prices for intra-firm transactions in advance. This paper interprets these contracts as a means to overcome a hold-up problem that occurs because governments cannot commit to non-excessive future tax rates. In addition, with private information, just as in practice, our APAs will be complex and require lengthy negotiations. Nevertheless, implemented APAs lead to a Pareto improvement even when all agents are risk neutral. However, not all efficient APAs are concluded in equilibrium. International agreements to avoid double taxation will likely reduce the number of realized APAs.

Keywords: Advance Pricing Agreements; Corporate Taxation; Multinational Firms; Transfer Pricing (search for similar items in EconPapers)
JEL-codes: G32 H25 M41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2014-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.tcd.ie/triss/assets/PDFs/iiis/iiisdp458.pdf

Related works:
Journal Article: The economics of advance pricing agreements (2017)
Working Paper: The economics of advance pricing agreements (2014)
Working Paper: The Economics of Advance Pricing Agreements (2014)
Working Paper: The Economics of Advance Pricing Agreements (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:iis:dispap:iiisdp458

Access Statistics for this paper

More papers in The Institute for International Integration Studies Discussion Paper Series from IIIS 01. Contact information at EDIRC.
Bibliographic data for series maintained by Maeve ().