The Resource Asset specificity, international profit shifting, and investment decisions
Asset specificity, international profit shifting, and investment decisions
Resource Information
The item Asset specificity, international profit shifting, and investment decisions represents a specific, individual, material embodiment of a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation.This item is available to borrow from 1 library branch.
Resource Information
The item Asset specificity, international profit shifting, and investment decisions represents a specific, individual, material embodiment of a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation.
This item is available to borrow from 1 library branch.
- Summary
- Multinationals have an incentive to shift taxable profits to low tax countries by manipulating the transfer prices of intragroup transactions. Transfer prices must conform to the arm's length standard. However, market prices are not available if transferred assets or performed services are firm-specific. In these cases, companies have considerable leeway in assessing transfer prices. Research and development (R&D) intensity is used as a proxy for firm-specific assets and services that are associated with enhanced opportunities to shift profits. An empirical analysis based on firm-level data on German outbound foreign direct investment during the period from 1996 until 2005 reveals that the tax response of intragroup transactions depends on the R&D intensity of multinational companies. The impact of taxes on investments decreases with an increasing R&D intensity, with the result that the local tax rate becomes less important for investment decisions of R&D intensive multinational companies
- Language
- eng
- Label
- Asset specificity, international profit shifting, and investment decisions
- Title
- Asset specificity, international profit shifting, and investment decisions
- Language
- eng
- Summary
- Multinationals have an incentive to shift taxable profits to low tax countries by manipulating the transfer prices of intragroup transactions. Transfer prices must conform to the arm's length standard. However, market prices are not available if transferred assets or performed services are firm-specific. In these cases, companies have considerable leeway in assessing transfer prices. Research and development (R&D) intensity is used as a proxy for firm-specific assets and services that are associated with enhanced opportunities to shift profits. An empirical analysis based on firm-level data on German outbound foreign direct investment during the period from 1996 until 2005 reveals that the tax response of intragroup transactions depends on the R&D intensity of multinational companies. The impact of taxes on investments decreases with an increasing R&D intensity, with the result that the local tax rate becomes less important for investment decisions of R&D intensive multinational companies
- Citation source
- In: Zeitschrift für Betriebswirtschaft. - (2010),
- http://library.link/vocab/creatorName
-
- Overesch, M
- Schreiber, U
- Geographic coverage
- International
- Language note
- English
- http://library.link/vocab/subjectName
-
- transfer pricing
- corporate income tax
- profit shifting
- foreign investment
- R&D
- Label
- Asset specificity, international profit shifting, and investment decisions
- Label
- Asset specificity, international profit shifting, and investment decisions
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<div class="citation" vocab="http://schema.org/"><i class="fa fa-external-link-square fa-fw"></i> Data from <span resource="http://link.library.ibfd.org/portal/Asset-specificity-international-profit-shifting/x5emfDgyays/" typeof="Book http://bibfra.me/vocab/lite/Item"><span property="name http://bibfra.me/vocab/lite/label"><a href="http://link.library.ibfd.org/portal/Asset-specificity-international-profit-shifting/x5emfDgyays/">Asset specificity, international profit shifting, and investment decisions</a></span> - <span property="potentialAction" typeOf="OrganizeAction"><span property="agent" typeof="LibrarySystem http://library.link/vocab/LibrarySystem" resource="http://link.library.ibfd.org/"><span property="name http://bibfra.me/vocab/lite/label"><a property="url" href="https://link.library.ibfd.org/">International Bureau of Fiscal Documentation</a></span></span></span></span></div>
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<div class="citation" vocab="http://schema.org/"><i class="fa fa-external-link-square fa-fw"></i> Data from <span resource="http://link.library.ibfd.org/portal/Asset-specificity-international-profit-shifting/x5emfDgyays/" typeof="Book http://bibfra.me/vocab/lite/Item"><span property="name http://bibfra.me/vocab/lite/label"><a href="http://link.library.ibfd.org/portal/Asset-specificity-international-profit-shifting/x5emfDgyays/">Asset specificity, international profit shifting, and investment decisions</a></span> - <span property="potentialAction" typeOf="OrganizeAction"><span property="agent" typeof="LibrarySystem http://library.link/vocab/LibrarySystem" resource="http://link.library.ibfd.org/"><span property="name http://bibfra.me/vocab/lite/label"><a property="url" href="https://link.library.ibfd.org/">International Bureau of Fiscal Documentation</a></span></span></span></span></div>
