The study on the transfer pricing determinants of multinational enterprises

• Main Authors: Huang, Yen-Wen, 黃燕雯
• Other Authors: 何怡澄
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/6g73ks

碩士 === 國立政治大學 === 行政管理碩士學程 === 106 === This study examines the major factors affecting multinational enterprises (MNEs) in Taiwan to avoid tax obligation on transfer pricing (TP), and analyzes if the current criteria of TP case selection is appropriate. In addition, this paper tries to verify the credibility of an indicator developed by Chen and Tsai (2010) to estimate abnormal TP transactions of companies. We measure transfer pricing noncompliance in terms of tax audit adjustments made by tax authorities. Base on a sample of 101 TP audits on public companies in Taiwan from 2004 to 2013, our empirical results show that companies which have lower gross profit margin, operation margin and net profit margin than the profit standard of the same business (D_PROFIT), higher return on assets (ROA), higher research and development (RD) expenditure, bigger firm size (SIZE), and higher proportion of foreign affiliates in all subsidiaries (MULTI) have more TP aggressiveness. Moreover, there are no significant relationships between the current criteria on TP case selection in Taiwan such as huge fluctuations in profits (D_CH_NI) and profits below the other companies in the MNE group (D_GROUP) and TP aggressiveness of MNEs. As regards the credibility of the indicator to estimate abnormal TP transactions of companies, we find that the results of ROA, growth rate (GROWTH), and firm size (SIZE) are consistent with this study, but the results of other factors such as shareholding ratios of the major shareholders, the directors, and the supervisors (SH), four major accounting firms (CPA4), ratio of debt (LEV) as well as electronics industry (ELECO) are not consistent with this paper. It means that the indicator to estimate abnormal TP transactions may not reflect the real TP audit adjustments.