Clemens Löffler recently published an article in the prestigious journal „Management Accounting Research“ on the topic of international transfer pricing.
The OECD established its international transfer pricing guidelines to prevent tax avoidance. However, these guidelines constitute an intervention in a multinational’s internal control system as transfer prices also enable coordination in divisionalized firms. The paper finds that the inherent trade-off of tax avoidance and coordination can be alleviated by further divisionalizing the multinational and implementing an appropriate domestic transfer pricing scheme.