Addressing the Transfer-Pricing Problem in an Origin-Basis X Tax

David Bradford

No 9843, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In a previous paper I described how the tax design called the X Tax would facilitate an international tax system free of many of the complexities and avoidance opportunities plaguing the existing international tax regime and also have neutrality properties generally deemed desirable. A choice must, however, be made between two basic treatments of transborder business transactions --the origin and destination principles. The destination-principle approach sidesteps the need to identify arm's length terms of transborder transactions between related business entities -- the transfer-pricing problem. This serious problem remains in the origin-principle approach, which, however, presents fewer challenges of monitoring the flow of goods and services across borders, obviates what I call the tourism problem' whereby people can reduce their taxes by consuming in a low-tax jurisdiction and, arguably most important, avoids transition effects associated with introduction of the tax and subsequent tax rate changes that occur in the destination approach. In this paper I explore possible special rules for transborder transactions between related parties in an origin-based system to eliminate the transfer-pricing problem.

JEL-codes: H20 H25 (search for similar items in EconPapers)
Date: 2003-07
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Bradford, David F. "Addressing The Transfer-Pricing Problem In An Origin-Basis X Tax," International Tax and Public Finance, 2003, v10(5,Sep), 591-610.

Downloads: (external link)
http://www.nber.org/papers/w9843.pdf (application/pdf)

Related works:
Journal Article: Addressing the Transfer-Pricing Problem in an Origin-Basis X Tax (2003)
Working Paper: Addressing the Transfer-Pricing Problem in an Origin-Basis X Tax (2003)
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:nbr:nberwo:9843

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9843

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().