Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach

Mashiri, Eukeria; Dzomira, Shewangu; Dzingirai, Canicio

doi:10.1080/23311975.2021.1907012

Cited by 10 publications

(6 citation statements)

References 36 publications

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“…They further pursue their rational actions when dealing with court cases and dispute resolution putting the needs of MNEs ahead of public interest. This was emphasised by researchers who explored the role of accountants in tax avoidance (Jones et al, 2018;Mashiri et al, 2021;Sikka & Willmott, 2013). Rational decisions are built upon three things: the ability to use resources to achieve set targets, allocate resources in an optimal manner that allows the maximisation of their use and lastly self-serving behaviour (Jonge, 2012).…”

Section: Figure 1 Conceptual Framework Rational Actors Actions and Decisions (Rationality And Exploitative Rationality)mentioning

confidence: 99%

An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

Mpofu

Mashiri²,

Schwartz

2021

Cogent Business & Management

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The abuse of transfer pricing by multinational enterprises (MNEs) is a topical issue the world over. Abusive transfer pricing results in the erosion of tax bases and profit shifting from countries with high tax rates to those with lower tax rates, thus enabling tax avoidance and evasion. Developing countries are argued to suffer most under the negative impacts of transfer pricing manipulation. This study investigates the strategies employed by MNEs to minimise their tax burden in developing countries. An understanding of the motives and strategies is fundamental in tax policy crafting and improvements that effectively respond to transfer pricing. Adopting the interpretivist research philosophy with the use of in-depth interviews with tax officers, tax consultants and Ministry of Finance Officials, the study established that amongst the transfer pricing schemes used by MNEs in Zimbabwe, the predominant one was the use of service fees. The most notable being management fees, this was a contribution to knowledge as this strategy was found to be scarcely discussed in literature and there was very little empirical evidence to back its existence. The study recommended use of targeted approaches by the revenue authority to minimise revenue losses through intragroup services.The findings serve as vital information for policymakers, revenue authorities and tax auditors.

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Section: Figure 1 Conceptual Framework Rational Actors Actions and Decisions (Rationality And Exploitative Rationality)mentioning

confidence: 99%

An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

Mpofu

Mashiri²,

Schwartz

2021

Cogent Business & Management

Self Cite

View full text Add to dashboard Cite

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“…During the last two decades, because of globalization, transfer pricing has become more intense and complex in global production, and multinational enterprises (MNEs) or transnational firms have been more prevalent in transfer pricing issues (Mashiri, 2021). Klassen et al (2017) described transfer pricing as a strategic tool used by MNEs for shifting profits from one company to another or from one tax jurisdiction to another to exploit tax advantages.…”

Section: Introductionmentioning

confidence: 99%

Determining the loss of mining sector tax revenue: Evidence from Mongolia

Damiran,

Sereenendorj,

Dashnyam

et al. 2024

JEECAR

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In recent years, due to significant tax revenue losses, transfer pricing has become an issue of concern for tax authorities, policymakers, and academics. In this study, the authors aim to analyze transfer pricing and its impact on fiscal revenue in the case of Mongolia, a developing country with a mining-dominated economy. In our research, we used the arm's length principle to determine transfer pricing and estimate the loss of corporate income tax due to transferring pricing; moreover, we compared the operating profit margin of Mongolia’s mining companies with the Far East and Central Asia Oceania countries. We found that Mongolia has lost about 44.4 billion MNT in corporate income tax revenue from the mining sector over the past seven years, estimated by adjusting the total operating revenue by an average of 10.5% for coal companies and 16.4% for copper companies. This result shows that mining companies are avoiding taxes by mispricing, which negatively affects the budget revenue in Mongolia. This research will contribute to the implementation of the common principles of transfer pricing and reduce tax evasion in Mongolia and similar countries with a mining-dominated economy.

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“…In addition to transfer prices, tax avoidance uses a TC mechanism, which refers to investment decisions made by companies to prioritize debt financing over equity capital in their transfer prices when funding operations. It is because, unlike dividends, debt can increase tax avoidance through tax benefits in the form of interest expenses on loans (Ismi & Linda, 2016;Mashiri et al, 2021;Merle et al, 2019;Per Č Evi Ć & Hladika, 2017).…”

Section: Introductionmentioning

confidence: 99%

Does Institutional Ownership Moderating Tax Avoidance? An Empirical Analysis In Indonesian List Company

Dharmayanti,

Yetmi,

Atichasari

et al. 2024

jak

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This study aims to determine the effect of Thin Capitalization, Transfer Prices, and Profitability on Tax Avoidance and the role of institutional ownership in moderating it. The population used in this study is LQ45 companies listed on the IDX, using a purposive sampling technique. The number of samples is 11 companies with financial statement data collection for the 2016-2020 period. This study uses a quantitative method, with SPSS version 23.0, to test the analysis. The results show that Thin Capitalization has a positive and significant effect on Tax Avoidance, with the value of t count > t table (2.246>2.00665). Transfer prices have a positive and significant effect on Tax Avoidance with a value of t count > t table (3.121>2.00665). Profitability partially has a positive and significant effect on Tax Avoidance with a value of t count > t table (6.211>2.00665). Thin Capitalization, Transfer Prices, and Profitability simultaneously positively and significantly affect Tax Avoidance with the calculated F value> F table (74.719>2.55). However, Institutional Ownership does not moderate the relationship between Thin Capitalization, Transfer Prices, and Profitability on Tax Avoidance

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Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach

Cited by 10 publications

References 36 publications

An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

Determining the loss of mining sector tax revenue: Evidence from Mongolia

Does Institutional Ownership Moderating Tax Avoidance? An Empirical Analysis In Indonesian List Company

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