Searching for Potential Tax-Evasive Transfer Pricing in Multinational Enterprises: A Mathematical Approach

5 Pages Posted: 12 Jan 2011

See all articles by Tomas Buus

Tomas Buus

University of Economics, Prague

Jaroslav Brada

University of Economics, Prague

Date Written: December 2, 2010

Abstract

We analyze possible source of tax evasion in the multinational enterprise (hereinafter "MNE") in this paper. We show that the tax obligation of the whole MNE depends on the structure of ownership of companies in MNE, which could be described by matrix form. Therefore the basic tax optimization tasks of MNE via transfer pricing can be understood as linear programming problems. In addition we propose a way to identify possible tax evasion behavior of companies realized via transfer pricing in multinational tax entity MNE.

Keywords: Transfer price, tax evasion, multinational enterprise, mathematical taxation

JEL Classification: D21, D29, D43, G39

Suggested Citation

Buus, Tomas and Brada, Jaroslav, Searching for Potential Tax-Evasive Transfer Pricing in Multinational Enterprises: A Mathematical Approach (December 2, 2010). Available at SSRN: https://ssrn.com/abstract=1738479 or http://dx.doi.org/10.2139/ssrn.1738479

Tomas Buus (Contact Author)

University of Economics, Prague ( email )

Nam. W. Churchilla 4
Praha, 130 67
Czech Republic

Jaroslav Brada

University of Economics, Prague ( email )

nam. W.Churchilla 4
Prague 3, 130 67
Czech Republic

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