• Corpus ID: 6421934

How does transfer-pricing enforcement a ff ect reported profits ?

@inproceedings{SaundersScott2013HowDT,
  title={How does transfer-pricing enforcement a ff ect reported profits ?},
  author={Molly J. Saunders-Scott},
  year={2013}
}

• Molly J. Saunders-Scott
• Published 2013
• Economics

Many governments are concerned that they lose tax revenue from profit shifting by multinational firms, and have stiffened transfer-pricing regulations in response. It is possible and, indeed, likely that these regulations actually reduce tax collections in most countries. The regulations are designed to decrease profit-shifting outflows, but they also may decrease profit-shifting inflows and increase compliance costs for all firms with related-party transactions. While the reduced outflows should increase reported profits, the other two effects, the reduced inflows and the higher compliance costs, reduce reported profits. Data from ORBIS on multinational corporations indicate that, for the average firm, increased regulation reduces the reported profits of the local affiliates of multinational corporations. ⇤Many thanks to James Hines, Joel Slemrod, Cathy Shakespeare, Charles Brown, Christian Gillitzer, Nicolas Duquette, Eric Ohrn, Devan Mescall, David Knapp, Daniel Reck and participants in the Michigan Public Finance Seminar for their helpful comments and suggestions.