At a cost: the real effects of Transfer Pricing Regulations

de Mooij, Ruud and Liu, L (2018) At a cost: the real effects of Transfer Pricing Regulations. Centre for Business Taxation Working Paper, Oxford.

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Abstract

Unilateral adoption of transfer pricing regulations may have a negative impact on real investment by multinational corporations (MNCs). This paper uses a quasi-experimental research design, exploiting unique panel data on domestic and multinational companies in 27 countries during 2006-2014, to find that MNC affliates reduce their investment by over 11 percent following the introduction of transfer pricing regulations. There is no significant reduction in total investment by the MNC group, suggesting that these investments are most likely shifted to affliates in other countries. The impact of transfer pricing regulations corresponds to an increase in the "TPR-adjusted" corporate tax rate by almost one quarter.

Item Type: Other Working Paper
Keywords: Oxford University Centre for Business Taxation, profit shifting, foreign direct investment, corporate tax policy, multinational firms
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 05 Feb 2019 17:30
Last Modified: 05 Feb 2019 17:30
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/7280

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