Production location of multinational firms under transfer pricing: the impact of the arm’s length principle

Kato, Hayato; Okoshi, Hirofumi

International Tax and Public Finance, 2019, 26(4), 835-871

Number of Access:394（2025-09-04 08:30 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/81779

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Title
Production location of multinational firms under transfer pricing: the impact of the arm’s length principle
Creator
NRID
1000030837703 1000030837703
ORCID
0000-0002-2063-8453 0000-0002-2063-8453
researchmap permalink
30837703 30837703
Scopus Author ID
57200115385 57200115385
CreatorName
Kato, Hayato
NRID
1000090880295 1000090880295
CreatorName
Okoshi, Hirofumi
Subject
Multinational enterprises (MNEs)
Transfer pricing
Production location choice
Intra-firm trade
Arm’s length principle (ALP)
Description
This is a post-peer-review, pre-copyedit version of an article published in Int. Tax Public Finance. The final authenticated version is available online at: https://doi.org/10.1007/s10797-018-9523-2.
Abstract
When multinational enterprises (MNEs) separate the geographical location of affiliates, they can shift profits between the affiliates by manipulating intra-firm prices of inputs. We show that if the international tax difference between the parent and the host countries is large, MNEs choose to separately locate their affiliates in the two countries. We also investigate the impact of the arm’s length principle (ALP) on the location choice, which requires that the intra-firm price of inputs should be set equal to the price of similar inputs for the independent downstream firms. The ALP may change the location choice of MNEs, bringing smaller tax revenues to the host country, but greater revenues globally.
Publisher
Springer
Source Title
International Tax and Public Finance
Volume (Issue)
26(4)
Page
835-871
Date of Issued
2019-08-15
Language
English
Handle URL
https://hdl.handle.net/11094/81779
PISSN
09275940
eISSN
15736970
NCID
AA10995134
Relation.isVersionOf
DOI (Publisher Version)
https://doi.org/10.1007/s10797-018-9523-2
Access Rights
open access
CopyRight
© 2018, Springer Science+Business Media, LLC, part of Springer Nature.
oaire:version
Accepted Manuscript
Category
学術雑誌論文 Journal Article