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Transfer pricing documentation – an efficient measure for combating the base erosion and profit shifting?

Author

Listed:
  • Liliana FELEAGA

    (Bucharest University of Economic Studies)

  • Ioana NEAC?U

    (Bucharest University of Economic Studies)

Abstract

The setting up of groups of companies has become a large scale phenomenon, dominating the global economy. These groups have set up subsidiaries in different countries, leading to the occurrence of issues regarding the taxation of the results within the group, and to the development of the transfer pricing concept, respectively. This concept has been used over the time by multinational corporations to move their profits in low- tax jurisdictions. For this reason, globally, there have been concerns regarding the adoption of a legislation that could combat the base erosion and profit shifting. This article analyses whether the adoption of a legislation which provides the transfer pricing documentation requirement represents an efficient measure for the blurring of the base erosion and profit shifting phenomenon. The research was performed at the level of the member countries of the Organisation for Economic Co-operation and Development. The article also aims to clarify certain aspects regarding transfer pricing and to provide a practical approach of the associated mechanisms. The novelty, originality and impact of the article on the accounting profession are represented by the fact that the transfer pricing concept is relatively new for the specialists from Romania and also for the tax authorities.

Suggested Citation

  • Liliana FELEAGA & Ioana NEAC?U, 2016. "Transfer pricing documentation – an efficient measure for combating the base erosion and profit shifting?," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(134), pages 183-183, January.
  • Handle: RePEc:aud:audfin:v:134:y:2016:i:14:p:183
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    References listed on IDEAS

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    1. Peralta, Susana & Wauthy, Xavier & van Ypersele, Tanguy, 2006. "Should countries control international profit shifting?," Journal of International Economics, Elsevier, vol. 68(1), pages 24-37, January.
    2. Bartelsman, Eric J. & Beetsma, Roel M. W. J., 2003. "Why pay more? Corporate tax avoidance through transfer pricing in OECD countries," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2225-2252, September.
    3. Kimberly A. Clausing, 2000. "The Impact of Transfer Pricing on Intrafirm Trade," NBER Chapters, in: International Taxation and Multinational Activity, pages 173-200, National Bureau of Economic Research, Inc.
    4. Theresa Lohse & Nadine Riedel & Christoph Spengel, 2012. "The Increasing Importance of Transfer Pricing Regulations – a Worldwide Overview," Working Papers 1227, Oxford University Centre for Business Taxation.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    transfer pricing; arm’s length principle; affiliation relationships; double taxation of results; manipulation of results; transfer pricing documentation;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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