Faculty of Economics and Business Administration Publications Database

Transfer Pricing, Double Taxation, and the Cost of Capital

Authors:
Source:
Volume: 98
Number: 3
Pages: 445 - 452
Year: 1996
Keywords: Transfer pricing; International business enterprises; Taxation
Abstract:

The effects of double taxation are analysed when a multinational enterprise can shift profits by transfer pricing behaviour. It is shown that the well-known Hartman-Sinn neutrality result may not hold in this case. Surprisingly, an increase in the taxation of foreign dividends may lead to a lower cost of capital for the foreign subsidiary.

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