 |
Partial Tax Coordination and Profit Shifting of Multinational Firms
1 : University of Freiburg
2 : Norwegian School of Economics
* : Corresponding author
This paper analyzes how transfer pricing regulations affect the stability of tax agreements. We use a three-country model of asymmetric tax competition and show that there may exist cases where as increasing regulation of transfer pricing raise the costs of profit shifting, countries are less likely to cooperate on corporate income taxes and thus tax harmonization agreements may become less sustainable.
