In order to achieve the maximum after-tax profits, MNEs often apply internal transfer price adjustments between parent companies and subsidiaries, or among the subsidiaries, in order to reduce their overall income tax payable. For example, when exporting products to subsidiaries in countries with high income tax, the transfer pricing manipulation is set at a higher level ([39] Styron, 2007) in order to reduce the surplus of the local subsidiaries and the tax payable. On the contrary, when exporting products to countries with low income tax, the transfer price is set at a lower level, in order to transfer the profits to the local subsidiaries, thus increasing the overall after-tax profits. The vertical integration of a multinational enterprise through transfer pricing manipulation would gain higher profits than two conventional trading companies of similar business operations ([14] Istrate et al. , 2009; [11] Granfield, 1993).
[19] Lin (2006) indicated that the main purposes and functions of applying transfer pricing strategies by MNEs are as follows:
Enhanced market competitiveness . The fundamental method for MNEs to improve a new product’s competitiveness in a foreign market is to set lower transfer prices of products purchased from within the enterprises, as well as affiliates, in order for the subsidiaries to be competitively in price in local markets.
Flexible transfer of internal funds . MNEs can transfer funds from a local subsidiary of a host country through high transfer in and low transfer-out prices to facilitate their global fund management. For example, when the currency of the host country may depreciate, or in order to avoid the over erosion of local assets by inflation, MNEs may take advantage of transfer pricing manipulation adjustment to reduce financial risks.
Alleviate tax burdens :
– Reduce tariff costs. MNEs may apply low-transfer pricing manipulation policies to reduce the tariff costs of the importing subsidiaries of the internal transactions. As the value-added proportion of products in the area is the calculation basis of tariffs, the tariff costs may be eliminated if the subsidiaries of MNEs, from outside the area, sell goods with lower transfer prices to subsidiaries in the area.
– Reduce income tax. To achieve the highest after-tax profits, MNEs often take advantage of the adjustments of parent-subsidiary, or subsidiary-subsidiary, transfer pricing manipulation strategies to reduce the overall income tax payable. For example, set a transfer price higher when exporting products from subsidiaries located in countries with high income tax, which reduces the profits and tax payable of the local subsidiaries, accordingly. On the contrary, set a transfer price lower when exporting goods to countries with low income tax, which transfers profits to local subsidiaries with low local tax rates in order to further increase the overall after-tax total profit of the enterprise.
Government control (price restrictions and quantity limits) :
– Break trade restrictions . When a host country adopts quotas, subsidies, or other non-tariff trade restrictions, MNEs are met with considerable obstacles when ensuring or expanding the local market objectives. Therefore, if the government of the host country places restrictions on quantities imported, without affecting the competitiveness of the products of the local market, then setting a higher transfer price will reduce taxes and thus make up for losses assumed from the inability to import large numbers of products. If the restriction is on imported amounts, then transfer price can be set lower to increase imports. On the contrary, the host country of the exporters within the MNEs can set restrictions on exports; thus, the export prices should be raised in order to reduce the income tax of the profit-seeking enterprise. If the restriction is on export amounts, then the transfer price should be set as low as possible in order to increase the amount of products exported. Thus, by setting transfer prices as low as is tolerable to local government would further achieve the overall maximized profits for MNEs.
– Overcome foreign exchange controls on restrictions of imports. If the market opportunities of a country are excellent, and government implemented foreign exchange controls are not conducive to local subsidiaries importing products from other countries, MNEs may reduce transfer prices to overcome such foreign exchange controls through low transfer-in prices, which reduce the local subsidiaries’ expenditures of foreign exchange, when importing a large quantity of products.
– Overcome dividend export restrictions. MNEs’ profits in the host country are remitted in the form of dividends and are often restricted by the government of the host country. However, MNEs may take advantage of high transfer pricing manipulation strategies to effectively shift such profits, through raising prices of internal business transactions.
2.2 Relevant factors affecting transfer pricing manipulation
[50] Dunning (1993) listed a myriad of incentives and environmental factors that encourage transfer pricing manipulation. The motivations of MNEs can be divided into external and internal motivations. To avoid international taxes and increase profits, MNEs adjust product quotes to evade unnecessary cost burdens. There are complex factors that influence transfer pricing manipulation within MNEs; therefore, prior to determining internal transfer pricing manipulation, MNEs must first establish the main purposes.
In addition, [40] Tang (2002) pointed out that there were 20 environmental factors affecting international transfer pricing manipulation, which could be further divided into external and internal motives of transfer pricing manipulation, including enterprise’s overall operating profits, host country subsidiaries’ interests, subsidiaries’ competitiveness in the host country, and host country subsidiaries’ demands for maintaining appropriate cash flows. [40] Tang (2002) and [38] Shapiro (1999) suggested that transfer pricing manipulation can reduce two major tax burdens, which are tariffs for international trades and income taxes. [45] Yancey and Cravens (1998) indicated that when facing different accumulative tax brackets across host countries, MNEs formulate transfer pricing strategies according to their own management goals.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
In order to achieve the , MNEs often apply internal transfer price adjustments between parent companies and subsidiaries, or among the subsidiaries, in order to reduce their overall income tax payable. For example, when exporting products to subsidiaries in countries with high income tax, the transfer pricing manipulation is set at a higher level ([39] Styron, 2007) in order to reduce the surplus of the local subsidiaries and the tax payable. On the contrary, when exporting products to countries with low income tax, the transfer price is set at a lower level, in order to transfer the profits to the local subsidiaries, thus increasing the . The vertical integration of a multinational enterprise through transfer pricing manipulation would gain higher profits than two conventional trading companies of similar business operations ([14] Istrate et al. , 2009; [11] Granfield, 1993).
[19] Lin (2006) indicated that the main purposes and functions of applying transfer pricing strategies by MNEs are as follows:
Enhanced market competitiveness . The fundamental method for MNEs to improve a new product’s competitiveness in a foreign market is to set lower transfer prices of products purchased from within the enterprises, as well as affiliates, in order for the subsidiaries to be competitively in price in local markets.
Flexible transfer of internal funds . MNEs can transfer funds from a local subsidiary of a host country through high transfer in and low transfer-out prices to facilitate their global fund management. For example, when the currency of the host country may depreciate, or in order to avoid the over erosion of local assets by inflation, MNEs may take advantage of transfer pricing manipulation adjustment to reduce financial risks.
Alleviate tax burdens :
– Reduce tariff costs. MNEs may apply low-transfer pricing manipulation policies to reduce the tariff costs of the importing subsidiaries of the internal transactions. As the value-added proportion of products in the area is the calculation basis of tariffs, the tariff costs may be eliminated if the subsidiaries of MNEs, from outside the area, sell goods with lower transfer prices to subsidiaries in the area.
– Reduce income tax. To achieve the , MNEs often take advantage of the adjustments of parent-subsidiary, or subsidiary-subsidiary, transfer pricing manipulation strategies to reduce the overall income tax payable. For example, set a transfer price higher when exporting products from subsidiaries located in countries with high income tax, which reduces the profits and tax payable of the local subsidiaries, accordingly. On the contrary, set a transfer price lower when exporting goods to countries with low income tax, which transfers profits to local subsidiaries with low local tax rates in order to further increase the overall after-tax total profit of the enterprise.
Government control (price restrictions and quantity limits) :
– Break trade restrictions . When a host country adopts quotas, subsidies, or other , MNEs are met with considerable obstacles when ensuring or expanding the local market objectives. Therefore, if the government of the host country places restrictions on quantities imported, without affecting the competitiveness of the products of the local market, then setting a higher transfer price will reduce taxes and thus make up for losses assumed from the inability to import large numbers of products. If the restriction is on imported amounts, then transfer price can be set lower to increase imports. On the contrary, the host country of the exporters within the MNEs can set restrictions on exports; thus, the export prices should be raised in order to reduce the income tax of the profit-seeking enterprise. If the restriction is on export amounts, then the transfer price should be set as low as possible in order to increase the amount of products exported. Thus, by setting transfer prices as low as is tolerable to local government would further achieve the overall maximized profits for MNEs.
– Overcome foreign exchange controls on restrictions of imports. If the market opportunities of a country are excellent, and government implemented foreign exchange controls are not conducive to local subsidiaries importing products from other countries, MNEs may reduce transfer prices to overcome such foreign exchange controls through low transfer-in prices, which reduce the local subsidiaries’ expenditures of foreign exchange, when importing a large quantity of products.
– Overcome dividend export restrictions. MNEs’ profits in the host country are remitted in the form of dividends and are often restricted by the government of the host country. However, MNEs may take advantage of high transfer pricing manipulation strategies to effectively shift such profits, through raising prices of internal business transactions.
2.2 Relevant factors affecting transfer pricing manipulation
[50] Dunning (1993) listed a myriad of incentives and environmental factors that encourage transfer pricing manipulation. The motivations of MNEs can be divided into external and internal motivations. To avoid international taxes and increase profits, MNEs adjust product quotes to evade unnecessary cost burdens. There are complex factors that influence transfer pricing manipulation within MNEs; therefore, prior to determining internal transfer pricing manipulation, MNEs must first establish the main purposes.
In addition, [40] Tang (2002) pointed out that there were 20 environmental factors affecting international transfer pricing manipulation, which could be further divided into external and internal motives of transfer pricing manipulation, including enterprise’s overall operating profits, host country subsidiaries’ interests, subsidiaries’ competitiveness in the host country, and host country subsidiaries’ demands for maintaining appropriate cash flows. [40] Tang (2002) and [38] Shapiro (1999) suggested that transfer pricing manipulation can reduce two major tax burdens, which are tariffs for international trades and income taxes. [45] Yancey and Cravens (1998) indicated that when facing different accumulative tax brackets across host countries, MNEs formulate transfer pricing strategies according to their own management goals.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
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