An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

The abuse of transfer pricing by multinational enterprises (MNEs) is a topical issue the world over. Abusive transfer pricing results in the erosion of tax bases and profit shifting from countries with high tax rates to those with lower tax rates, thus enabling tax avoidance and evasion. Developing...

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Autores principales:	Favourate Sebele-Mpofu, Eukeria Mashiri, Samantha Chantelle Schwartz
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2021
Materias:	transfer pricing strategies mnes base erosion profit shifting tax avoidance developing countries Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/f546bd6086884e4a9815dd3e247c4fa8
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spelling	oai:doaj.org-article:f546bd6086884e4a9815dd3e247c4fa82021-12-02T16:37:38ZAn exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries2331-197510.1080/23311975.2021.1944007https://doaj.org/article/f546bd6086884e4a9815dd3e247c4fa82021-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2021.1944007https://doaj.org/toc/2331-1975The abuse of transfer pricing by multinational enterprises (MNEs) is a topical issue the world over. Abusive transfer pricing results in the erosion of tax bases and profit shifting from countries with high tax rates to those with lower tax rates, thus enabling tax avoidance and evasion. Developing countries are argued to suffer most under the negative impacts of transfer pricing manipulation. This study investigates the strategies employed by MNEs to minimise their tax burden in developing countries. An understanding of the motives and strategies is fundamental in tax policy crafting and improvements that effectively respond to transfer pricing. Adopting the interpretivist research philosophy with the use of in-depth interviews with tax officers, tax consultants and Ministry of Finance Officials, the study established that amongst the transfer pricing schemes used by MNEs in Zimbabwe, the predominant one was the use of service fees. The most notable being management fees, this was a contribution to knowledge as this strategy was found to be scarcely discussed in literature and there was very little empirical evidence to back its existence. The study recommended use of targeted approaches by the revenue authority to minimise revenue losses through intragroup services. The findings serve as vital information for policymakers, revenue authorities and tax auditors.Favourate Sebele-MpofuEukeria MashiriSamantha Chantelle SchwartzTaylor & Francis Grouparticletransfer pricing strategiesmnesbase erosionprofit shiftingtax avoidancedeveloping countriesBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 8, Iss 1 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	transfer pricing strategies mnes base erosion profit shifting tax avoidance developing countries Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	transfer pricing strategies mnes base erosion profit shifting tax avoidance developing countries Business HF5001-6182 Management. Industrial management HD28-70 Favourate Sebele-Mpofu Eukeria Mashiri Samantha Chantelle Schwartz An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
description	The abuse of transfer pricing by multinational enterprises (MNEs) is a topical issue the world over. Abusive transfer pricing results in the erosion of tax bases and profit shifting from countries with high tax rates to those with lower tax rates, thus enabling tax avoidance and evasion. Developing countries are argued to suffer most under the negative impacts of transfer pricing manipulation. This study investigates the strategies employed by MNEs to minimise their tax burden in developing countries. An understanding of the motives and strategies is fundamental in tax policy crafting and improvements that effectively respond to transfer pricing. Adopting the interpretivist research philosophy with the use of in-depth interviews with tax officers, tax consultants and Ministry of Finance Officials, the study established that amongst the transfer pricing schemes used by MNEs in Zimbabwe, the predominant one was the use of service fees. The most notable being management fees, this was a contribution to knowledge as this strategy was found to be scarcely discussed in literature and there was very little empirical evidence to back its existence. The study recommended use of targeted approaches by the revenue authority to minimise revenue losses through intragroup services. The findings serve as vital information for policymakers, revenue authorities and tax auditors.
format	article
author	Favourate Sebele-Mpofu Eukeria Mashiri Samantha Chantelle Schwartz
author_facet	Favourate Sebele-Mpofu Eukeria Mashiri Samantha Chantelle Schwartz
author_sort	Favourate Sebele-Mpofu
title	An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
title_short	An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
title_full	An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
title_fullStr	An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
title_full_unstemmed	An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries
title_sort	exposition of transfer pricing motives, strategies and their implementation in tax avoidance by mnes in developing countries
publisher	Taylor & Francis Group
publishDate	2021
url	https://doaj.org/article/f546bd6086884e4a9815dd3e247c4fa8
work_keys_str_mv	AT favouratesebelempofu anexpositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries AT eukeriamashiri anexpositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries AT samanthachantelleschwartz anexpositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries AT favouratesebelempofu expositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries AT eukeriamashiri expositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries AT samanthachantelleschwartz expositionoftransferpricingmotivesstrategiesandtheirimplementationintaxavoidancebymnesindevelopingcountries
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An exposition of transfer pricing motives, strategies and their implementation in tax avoidance by MNEs in developing countries

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