Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149327
Authors: 
Chalendard, Cyril
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6240
Abstract: 
Based on a natural experiment that took place in Ecuador in the context of a capital outflow tax, this paper presents suggestive evidence of the emergence of an abnormal transfer pricing behavior. We exploit the fact that some imports were eligible to a tax-credit measure aiming to offset the capital outflow tax. The identification strategy relies on the fact that a foreign multinational enterprise has only an incentive to increase the unit value -transfer price- for profit shifting motivations of products eligible to the tax-credit. Then, comparing the evolution of the unit value of eligible products (the treatment group) with that of non eligible products (the comparison group) before and after the tax-credit measure, we estimate the over-reporting incentive's impact on the reported value. Results show that the declared unit value of eligible imports increased following the introduction of the tax-credit measure. Various tests suggest that this abnormal increase is attributable to a profit-shifting behavior.
Subjects: 
profit-shifting
tax evasion
transfer pricing
tax loophole
capital outflow tax
customs reform
JEL: 
F13
H25
H26
H32
K42
Document Type: 
Working Paper

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