Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24539
Authors: 
Overesch, Michael
Year of Publication: 
2006
Series/Report no.: 
ZEW Discussion Papers 06-84
Abstract: 
This paper investigates whether transfer pricing of intrafirm sales within multinationals represents an important channel of company tax planning. A simple theoretical model, considering profit shifting activities of a multinational company, is used to obtain empirical implications. The empirical analysis, based on a panel of German multinationals, considers directly the supposed tax response of intrafirm sales. The analysis shows a significantly negative impact of the local tax rate on the size of balance sheet items, which reflect intrafirm sales. Thus, the results suggest that transfer pricing of intrafirm sales constitutes an important channel of companies? profit shifting activities.
Subjects: 
Taxation
Multinationals
Profit Shifting
Transfer Pricing
Firm-level Data
JEL: 
H25
H32
H26
Document Type: 
Working Paper

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