Nielsen, Søren Bo Raimondos-Møller, Pascalis Schjelderup, Guttorm
Year of Publication:
CESifo Working Paper 1586
The paper examines how country tax differences affect a multinational enterprise's choice to centralize or de-centralize its decision structure. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs - here, as a strategic pre-commitment device and a tax manipulation instrument -, we show that (de-)centralized decisions are more profitable when tax differentials are (small) large.
centralized vs. de-centralized decisions taxes MNEs