PhD Candidate, Andreea- Lavinia Cazacu (Neamtu)
University of Craiova, Romania
Faculty of Economics and Business Administration, Finance Department
It should be noted that tax differentials between states provide multinational companies with a possibility of arbitration that allows them to minimize tax payments (Mooij et al., 2014). This study is about how multinational companies opt for transfer pricing in the presence of differentiated corporate tax rates in the context of economic globalization. A transfer price is a value placed on goods and services traded between divisions of an organization. Statements on transfer pricing on tax avoidance by multinationals are common, but in practice economic evidence is insufficient. Globalization of the economy and the desire of companies to reduce their tax burden has led states to adopt measures to protect tax collections and measures to avoid, to a certain extent, the outsourcing of the taxable base of taxpayers to affiliated entities in order to obtain a tax regime more favorable. The current economic globalization can be assimilated to the reason for the existence of transfer prices and has brought not only advantages but also some disadvantages, such as the phenomenon of internationalization of economic criminality. But a practical approach will help to focus on solutions to these issues, solutions that will help developing countries address transfer pricing issues in a way that is robust and equitable to all parties involved.
Keywords: Transfer Pricing, Economic Globalization, Arm Length Principle, Affiliated Companies, Median Value.
JEL Code: F01, F23
İstanbul: Hiperlink Yayınları, 2018.