Trade, Multinationals, and Transfer Pricing Regulations
Center for Economic Studies Working Paper at University of Munich No. 152
25 Pages Posted: 23 Apr 1998
Date Written: January 1998
Recent years have seen the introduction of profit comparisons by national tax authorities to cope with multinationals' profit shifting activities. The paper argues that a country which switches from price related transfer pricing rules to profit related measures can reduce imports without changing firms' transfer prices. The trade effect makes the change of transfer pricing rules a potential instrument of protectionism and strategic trade policy.
JEL Classification: F23, H87
Suggested Citation: Suggested Citation