Journal article
The arm’s length principle and distortions to multinational firm organisation
- Abstract:
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To prevent profit shifting by manipulation of transfer prices, tax authorities typically apply the arm’s length principle in corporate taxation and use comparable market prices to ‘correctly’ assess the value of intracompany trade and royalty income of multinationals. We develop a model of heterogeneous firms subject to financing frictions and offshoring of intermediate inputs. We find that arm’s length prices systematically differ from independent party prices. Application of the principle d...
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- Publication date:
- 2011-01-01
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- UUID:
-
uuid:3607744f-e540-4336-bac8-04e758b515e0
- Local pid:
- oai:eureka.sbs.ox.ac.uk:1340
- Deposit date:
- 2011-12-14
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- Copyright date:
- 2011
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