Tax and tariff planning through transfer prices: The role of the head office and business unit
利用一家大型跨国公司的内部转让定价数据，分析了总部和业务单元如何通过调整内部交易价格来降低所得税和关税，发现业务单元在税收规划中贡献更大，且其作用受市场竞争、税务风险等因素影响。
We study the roles of the head office (HO) and the business units (BUs) of a multinational corporation (MNC) in reducing income tax and tariff payments through internal transfer prices in international trades. Using confidential transfer price data of a large MNC, we analyze how the different elements of internal transfer prices set by the HO and BUs vary differently from external prices with income tax rates, tariff rates, and the tradeoff between the two. Absent severe agency conflicts, we find that the BUs contribute more to tax planning than the HO, despite that explicit incentives to do so are not included in the compensation schemes. The roles of the HO and BUs vary with product market competition, the risk of conflicts with tax and customs authorities, and agency problems within the firm. Moreover, we provide evidence of strategic trade cost allocations among BUs to reduce income taxes.