Taxes and Decision Rights in Multinationals

Søren Bo Nielsen, Pascalis Raimondos-Møller, Guttorm Schjelderup

Publikation: Working paper › Forskning

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Resumé

We examine how a multinational's choice to centralize or de-centralize itsdecision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs — here, as a strategic pre-commitment device and a tax manipulation instrument —, we show that decentralization is preferred in case of small tax differentials, whereas centralization can be more profitable, when tax differentials are large. In essence, the organizational flexibility of MNEs is triggered by the scope for tax minimization. Our analysis allows for both commitment and non-commitment to transfer prices, and for alternative modes of competition.Keywords: Centralized vs. de-centralized decisions, taxes, transfer prices, MNEs.JEL-Classification: H25, F23, L23.
OriginalsprogEngelsk
Udgivelses stedKøbenhavn
Antal sider21
StatusUdgivet - 2006

Emneord

  • Skatter
  • Interne priser
  • Multinationale selskaber

Citer dette

Nielsen, S. B., Raimondos-Møller, P., & Schjelderup, G. (2006). Taxes and Decision Rights in Multinationals. København.
Nielsen, Søren Bo ; Raimondos-Møller, Pascalis ; Schjelderup, Guttorm. / Taxes and Decision Rights in Multinationals. København, 2006.
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Nielsen, SB, Raimondos-Møller, P & Schjelderup, G 2006 'Taxes and Decision Rights in Multinationals' København.

Taxes and Decision Rights in Multinationals. / Nielsen, Søren Bo; Raimondos-Møller, Pascalis; Schjelderup, Guttorm.

København, 2006.

Publikation: Working paper › Forskning

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T1 - Taxes and Decision Rights in Multinationals

AU - Nielsen, Søren Bo

AU - Raimondos-Møller, Pascalis

AU - Schjelderup, Guttorm

PY - 2006

Y1 - 2006

N2 - We examine how a multinational's choice to centralize or de-centralize itsdecision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs — here, as a strategic pre-commitment device and a tax manipulation instrument —, we show that decentralization is preferred in case of small tax differentials, whereas centralization can be more profitable, when tax differentials are large. In essence, the organizational flexibility of MNEs is triggered by the scope for tax minimization. Our analysis allows for both commitment and non-commitment to transfer prices, and for alternative modes of competition.Keywords: Centralized vs. de-centralized decisions, taxes, transfer prices, MNEs.JEL-Classification: H25, F23, L23.

AB - We examine how a multinational's choice to centralize or de-centralize itsdecision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs — here, as a strategic pre-commitment device and a tax manipulation instrument —, we show that decentralization is preferred in case of small tax differentials, whereas centralization can be more profitable, when tax differentials are large. In essence, the organizational flexibility of MNEs is triggered by the scope for tax minimization. Our analysis allows for both commitment and non-commitment to transfer prices, and for alternative modes of competition.Keywords: Centralized vs. de-centralized decisions, taxes, transfer prices, MNEs.JEL-Classification: H25, F23, L23.

KW - Skatter

KW - Interne priser

KW - Multinationale selskaber

M3 - Working paper

BT - Taxes and Decision Rights in Multinationals

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Nielsen SB, Raimondos-Møller P, Schjelderup G. Taxes and Decision Rights in Multinationals. København. 2006.

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