Faculty of Economics and Business Administration Publications Database

Trade, Multinationals, and Transfer Pricing Regulations

Schjelderup, Guttorm
Volume: 32
Number: 3
Pages: 817 - 834
ISSN-Print: 0008-4085
Year: 1999
Keywords: Trade regulation; International business enterprises; Transfer pricing; Economic policy; Econometric models; Canada
Abstract: Recent years have seen the introduction of profit comparisons by national tax authorities to cope with multinationals'' profit shifting activities. The paper argues that a country which switches from price related transfer pricing rules to profit related measures can reduce imports without changing firms'' transfer prices. The trade effect makes the change of transfer pricing rules a potential instrument of protectionism and strategic trade policy.