This paper investigates income shifting activities via International Transfer Pricing (ITP) practices carried out by companies located in Italy. We adopt an indirect method, based on the comparison of the performances between foreign controlled companies (FCCs) and domestically-controlled companies (DCCs), to show that FCCs outperform their DCCs counterparts, especially in the case of small and medium enterprises. This result holds after controlling for differences in size, sector, geographical location, capital structure and investment policies. Overall, our findings contrast with previous empirical evidence on ITP practices in other countries and suggest further research to verify whether the search for comparables as prescribed by the OECD transfer pricing guidelines is able to guarantee fairness and reliability for tax-payers or it is fallacious in principle.
I prezzi di trasferimento internazionali: un'indagine empirica sulle imprese operanti in Italia
MURA, ALESSANDRO;
2012-01-01
Abstract
This paper investigates income shifting activities via International Transfer Pricing (ITP) practices carried out by companies located in Italy. We adopt an indirect method, based on the comparison of the performances between foreign controlled companies (FCCs) and domestically-controlled companies (DCCs), to show that FCCs outperform their DCCs counterparts, especially in the case of small and medium enterprises. This result holds after controlling for differences in size, sector, geographical location, capital structure and investment policies. Overall, our findings contrast with previous empirical evidence on ITP practices in other countries and suggest further research to verify whether the search for comparables as prescribed by the OECD transfer pricing guidelines is able to guarantee fairness and reliability for tax-payers or it is fallacious in principle.
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