The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Transfer Pricing

  • Jack M. Mintz
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1810

Abstract

Governments establish tax rules for setting transfer prices for non-arm’s length transactions made by multinationals, following guidelines established by the OECD (1995) under Article 9 of the OECD Model Tax Convention. Various methodologies have been established; the first preference is determining comparable uncontrolled prices according to the arm’s length principle. Given the difficulties of achieving comparable transactions in determining price, margins or profitability, other methods, such as allocating profits among members of a corporate group according to a formula, have instead been relied upon for multi-jurisdictional corporate income taxation in some circumstances.

Keywords

Arm’s length prices Capital intensity Comparable uncontrolled price Competent authority Cost-plus margin Double taxation Formulary apportionment Resale-minus margin Tax treaties Transactional net margin method Transfer pricing 

JEL Classifications

H2 
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Bibliography

  1. Haufler, A. 2001. Taxation in a global economy. Cambridge: Cambridge University Press.Google Scholar
  2. Martens-Weiner, J. 2006. Company tax reform in the European Union. New York: Springer.Google Scholar
  3. OECD (Organisation for Economic Co-operation and Development). 1995. Transfer pricing guidelines for multinational enterprises and tax administrations. Paris: OECD.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jack M. Mintz
    • 1
  1. 1.