Transfer pricing rules and corporate tax competition

Article Abstract:

A model of a multinational parent based in a home country that sells a non-marketed commodity only to a subsidiary operating in a foreign country has been developed. Special assumptions used to simplify the model help in deriving an optimal payment based on profit shares, transfer price and lump-sum transfer. The model shows that host countries can increase taxation rates on foreign firms if productivity and cost modifications induce lower effective corporate tax rates. It also shows that harmonization can lead to lower effective corporate tax rates.

Analysis, Transfer pricing

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Optimality properties of alternative systems of taxation of foreign capital income

Article Abstract:

Alternative systems of foreign capital income are evaluated in the context of optimal taxation. They include the residence-based system with exception, the full taxation after deduction system and the source-based system with exception. The source-based and residence-based systems are found to be equally capable of implementing a national optimum, provided an exception is adopted that treats foreign multinationals differently from what is specified for domestic multinationals.

Models, Foreign investments, Tax administration and procedure, Tax administration, Capital investments

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On the taxation of multinational corporate investment when the deferral method is used by the capital exporting country

Article Abstract:

An analysis of mutinational corporate investment taxation is presented. The analysis assumes that a capital exploring country applies the deferral method for taxation. It is shown that the exporting country's tax on remitted dividends has no impact on subsidiaries under conditions of similar corporate tax bases for both countries involved in international trade. The capital importer also exhibits a non-neutral cash flow tax.

Research, Investments, Tax shelters, Deferred tax (Accounting)

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