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Transfer pricing practices and specific anti-avoidance rules in Asian developing countries

Transfer pricing practices and specific anti-avoidance rules in Asian developing countries The purpose of this paper is to examine the existence of income shifting using the practice of transfer pricing (TP), not only in sales but also in purchase and management service transactions, in Asian developing countries. The paper also investigates the role of the specific anti-avoidance rules (SAAR) in preventing TP practices in various types of transaction.Design/methodology/approachThe research employs panel data from a sample of 200 subsidiaries in ten countries over the period 2010–2014.FindingsDifferent results were obtained from previous research on developed countries, which found that TP practice was proven in sales transactions. This study finds no evidence for TP practices in sales transactions, but that they do take place in purchase, management service fee and management services revenue transactions. The study also finds evidence that SAAR reduces the practice of TP in sales transactions.Originality/valueThe research investigates TP practices, not only those related to sales, but also to purchases, management service fees and management service revenue to related parties. The sample comprises multinational subsidiaries located in Asian developing countries that have rarely been investigated in previous studies. This research examines the effect of SAAR in preventing TP practices in various types of transaction and develops scoring based on an instrument that integrates each SAAR rule/requirement. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Emerging Markets Emerald Publishing

Transfer pricing practices and specific anti-avoidance rules in Asian developing countries

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References (40)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1746-8809
DOI
10.1108/ijoem-10-2018-0541
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine the existence of income shifting using the practice of transfer pricing (TP), not only in sales but also in purchase and management service transactions, in Asian developing countries. The paper also investigates the role of the specific anti-avoidance rules (SAAR) in preventing TP practices in various types of transaction.Design/methodology/approachThe research employs panel data from a sample of 200 subsidiaries in ten countries over the period 2010–2014.FindingsDifferent results were obtained from previous research on developed countries, which found that TP practice was proven in sales transactions. This study finds no evidence for TP practices in sales transactions, but that they do take place in purchase, management service fee and management services revenue transactions. The study also finds evidence that SAAR reduces the practice of TP in sales transactions.Originality/valueThe research investigates TP practices, not only those related to sales, but also to purchases, management service fees and management service revenue to related parties. The sample comprises multinational subsidiaries located in Asian developing countries that have rarely been investigated in previous studies. This research examines the effect of SAAR in preventing TP practices in various types of transaction and develops scoring based on an instrument that integrates each SAAR rule/requirement.

Journal

International Journal of Emerging MarketsEmerald Publishing

Published: Jun 1, 2021

Keywords: Income shifting; Transfer pricing; Specific anti-avoidance rules

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