Transparency and Transfer Prices

Ortmann and Simons investigate how increased transparency in transfer pricing influences (i) corporate reporting decisions, (ii) tax authority incentives, and (iii) economic outcomes such as tax revenue and the allocation of investments among countries. Using a theoretical approach, they contrast two competing transparency regimes. They study a regime mandating a high level of transparency (country-by-country reporting) under which tax authorities are able to monitor transfer prices. Furthermore, they analyze allocations of taxable income relying on a formula-based distribution procedure. While such procedure prohibits conventional accounting-based profit shifting through transfer pricing, it might cause real effects.

    Participating Institutions

    TRR 266‘s main locations are Paderborn University, HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.