Tariff-induced transfer pricing and the CCCTB

Ronald Davies

No 201314, Working Papers from School of Economics, University College Dublin

Abstract: The common consolidated corporate tax base has been suggested as a way to curb tax avoidance by allocating profits across borders via a formula. This paper demonstrates that when transfer pricing occurs both for tariff and tax minimization, that moving from separate accounting to formula apportionment can actually increase transfer pricing. This, combined with arm's length pricing regulations, can result in lower revenues for high-tax countries and lower overall revenues. This casts additional doubt over whether such a move would have its intended, revenue-enhancing effects.

Keywords: Common Consolidated Corporate Tax Base; Vertical FDI; Transfer pricing; Formula apportionment (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-acc, nep-iue and nep-pbe
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http://hdl.handle.net/10197/4799 First version, 2013 (application/pdf)

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