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Defenders of the status quo: making sense of the international discourse on transfer pricing methodologies

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  • Fritz Brugger
  • Rebecca Engebretsen

Abstract

Over a third of international trade happens within, rather than between, corporations. This makes establishing transfer prices – the price of transactions within and between related corporations – pivotal, as it defines corporations’ tax bills. Tax authorities worldwide follow the OECD transfer pricing guidelines and its accompanying methods for taxing corporations. This despite the guidelines’ well-documented weaknesses and even though alternative and potentially simpler methods exist. Existing literature helps explain why the OECD guidelines continue to dominate but not how those in favor of the status quo will go about defending them. We offer a novel, theory-based framework, to explain how supporters of the status quo – the epistemic community – will respond, using a combination of strategies targeting the policy discourse but also policy makers, in an effort to bolster the legitimacy of the OECD guidelines. We use discourse network analysis to study the debate on simplified transfer pricing methods from 1995 to 2018 and the positions of actors engaged. Our data confirms that the epistemic community deploys a hypothesized mix of strategies to ensure the durability of the OECD guidelines and accompanying methods, at the same time undermining the position of alternative approaches.

Suggested Citation

  • Fritz Brugger & Rebecca Engebretsen, 2022. "Defenders of the status quo: making sense of the international discourse on transfer pricing methodologies," Review of International Political Economy, Taylor & Francis Journals, vol. 29(1), pages 307-335, January.
  • Handle: RePEc:taf:rripxx:v:29:y:2022:i:1:p:307-335
    DOI: 10.1080/09692290.2020.1807386
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    Cited by:

    1. Favourate Y. Mpofu & Eukeria Wealth, 2022. "The Arm’s Length Principle: A Panacea or Problem to Regulating Transfer Pricing Transactions by MNEs in Developing Countries," Eurasian Journal of Business and Management, Eurasian Publications, vol. 10(2), pages 137-152.
    2. Ormeño-Pérez, Rodrigo & Oats, Lynne, 2024. "The making of problematic tax regulation: A Bourdieusian perspective," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).

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