Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach
The problem of revenue leakages through transfer pricing remains una- bated, and an examination of possible causes is a continuum. This study provides a nuanced examination of the interaction between MNCs and the tax consultants (TCs) which is treated with mixed views in the existing literature....
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| Format: | Article |
| Language: | English |
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Cogent OA
2022
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| Online Access: | https://doi.org/10.1080/23311975.2021.1907012 http://hdl.handle.net/11408/4974 |
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| author | Mashiri, Eukeria Dzomira, Shewangu Canicio, Dzingirai |
| author_facet | Mashiri, Eukeria Dzomira, Shewangu Canicio, Dzingirai |
| author_sort | Mashiri, Eukeria |
| collection | DSpace |
| description | The problem of revenue leakages through transfer pricing remains una-
bated, and an examination of possible causes is a continuum. This study provides
a nuanced examination of the interaction between MNCs and the tax consultants
(TCs) which is treated with mixed views in the existing literature. The role of TCs in
aiding and abetting taxpayers into abusive transfer pricing (TP) has implications for
policy especially in situations where the tax administration systems are porous.
Based on a theoretical review (deductive theorising) the study moves from exploring
broad and general aspects of the game theory to applying them to tax forestalling
through TP by Multinational Corporations (MNCs). The study critiques the assump-
tions of game theory and explores the influence of TCs in TP decision making
processes by MNCs. It gives a theoretical explanation (interpretive phenomenology)
on game theory attempting to promote a deeper understanding of TP by MNCs. The
study contributes to knowledge by exploring a confluence of three TP-related
aspects which have been treated in isolation in existing literature. The findings show that the tacit collusion between TCs and MNCs sanitise the abusive TP activities by
minimising the chances of the MNCs shenanigans being recognised by the tax
authority due to information asymmetry. Further, the mediating role of TCs is
polarised and benefits the TCs and the MNCs who will share the spoils at the
expense of the tax authority. |
| format | Article |
| id | ir-11408-4974 |
| institution | My University |
| language | English |
| publishDate | 2022 |
| publisher | Cogent OA |
| record_format | dspace |
| spelling | ir-11408-49742022-07-15T13:10:15Z Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach Mashiri, Eukeria Dzomira, Shewangu Canicio, Dzingirai game theory MNCs abusive transfer pricing tax consultant aggressive tax planning The problem of revenue leakages through transfer pricing remains una- bated, and an examination of possible causes is a continuum. This study provides a nuanced examination of the interaction between MNCs and the tax consultants (TCs) which is treated with mixed views in the existing literature. The role of TCs in aiding and abetting taxpayers into abusive transfer pricing (TP) has implications for policy especially in situations where the tax administration systems are porous. Based on a theoretical review (deductive theorising) the study moves from exploring broad and general aspects of the game theory to applying them to tax forestalling through TP by Multinational Corporations (MNCs). The study critiques the assump- tions of game theory and explores the influence of TCs in TP decision making processes by MNCs. It gives a theoretical explanation (interpretive phenomenology) on game theory attempting to promote a deeper understanding of TP by MNCs. The study contributes to knowledge by exploring a confluence of three TP-related aspects which have been treated in isolation in existing literature. The findings show that the tacit collusion between TCs and MNCs sanitise the abusive TP activities by minimising the chances of the MNCs shenanigans being recognised by the tax authority due to information asymmetry. Further, the mediating role of TCs is polarised and benefits the TCs and the MNCs who will share the spoils at the expense of the tax authority. 2022-07-15T13:10:15Z 2022-07-15T13:10:15Z 2021 Article Eukeria Mashiri, Shewangu Dzomira & Dzingirai Canicio | (2021) Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach, Cogent Business & Management, 8:1, 1907012, DOI: 10.1080/23311975.2021.1907012 2331-1975 https://doi.org/10.1080/23311975.2021.1907012 http://hdl.handle.net/11408/4974 en Cogent Business & Management;8:1, 1907012 open Cogent OA |
| spellingShingle | game theory MNCs abusive transfer pricing tax consultant aggressive tax planning Mashiri, Eukeria Dzomira, Shewangu Canicio, Dzingirai Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title | Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title_full | Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title_fullStr | Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title_full_unstemmed | Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title_short | Transfer pricing auditing and tax forestalling by Multinational Corporations: A game theoretic approach |
| title_sort | transfer pricing auditing and tax forestalling by multinational corporations: a game theoretic approach |
| topic | game theory MNCs abusive transfer pricing tax consultant aggressive tax planning |
| url | https://doi.org/10.1080/23311975.2021.1907012 http://hdl.handle.net/11408/4974 |
| work_keys_str_mv | AT mashirieukeria transferpricingauditingandtaxforestallingbymultinationalcorporationsagametheoreticapproach AT dzomirashewangu transferpricingauditingandtaxforestallingbymultinationalcorporationsagametheoreticapproach AT caniciodzingirai transferpricingauditingandtaxforestallingbymultinationalcorporationsagametheoreticapproach |