Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204683
Authors: 
Greil, Stefan
Schwarz, Christian
Stein, Stefan
Year of Publication: 
2018
Series/Report no.: 
Düsseldorf Working Papers in Applied Management and Economics 47
Abstract: 
The "fair" taxation of digital business models is challenging. One of the key aspects - both policy makers and the public opinion consider as most pressuring - is the determination of intragroup transfer prices for intangibles used in digital business models. In this paper, we address the issue of a "perceived fair" taxation of the digital economy in the light of the arm's length principle based on a survey with transfer pricing experts. The aim of the survey is not to estimate arm's length profit allocations but rather to elicit fairness considerations in different transfer pricing related scenarios. In a digital economy framework where arm's length profits are distributed extremely inequitably, subjects perceive this distribution of profits as most unfair compared to more balanced scenarios. Consequently, subjects propose a "fair" distribution of profits that substantially differs from the exogenously given arm's length allocation. In scenarios with a more balanced arm's length allocation of profits, we find that the perceived fairness for the expert groups increases while a control group of business students is almost not influenced by the arm's length allocation of profits.
Subjects: 
corporate income tax
profit-shifting
arm's length principle
fairness
digital economy
JEL: 
D90
F23
H25
H26
K34
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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