¡@¡@This paper studies the MNE¡¦s choice of the optimal transfer price with the consideration of the possibility of transfer pricing penalty. Because the transfer prices are determined in-house, there are opportunities for MNE to manipulate the prices and evade corporate income tax and trade taxes. To reduce these opportunities, most governments have implemented transfer pricing regulations based on the OECD guidelines. If the MNE¡¦s manipulation of transfer prices is too flagrant, an extra tax will be levied to penalize the MNE. As long as the tax rates are different in different jurisdictions, the MNE will pick transfer prices that balance between the gain from profit shifting and the loss coming from the possible penalty.
¡@¡@Three forms of probability are introduced to capture the possibility of being penalized when the MNE tries to manipulate the transfer prices. We find close form solutions under the linear and quadratic forms of probability. And numerical simulation is used to get the optimal transfer price under the exponential form of probability.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0628110-214234 |
| Date | 28 June 2010 |
| Creators | Liu, Ren-her |
| Contributors | Tzang, Shyh-Weir, Shyu, So-De, Hung, Chih-Hsing |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0628110-214234 |
| Rights | withheld, Copyright information available at source archive |
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