Correlation between transfer pricing strictness index and foreign investment

Thesis title: Correlation between transfer pricing strictness index and foreign investment
Author: Jafarova, Khayala
Thesis type: Diploma thesis
Supervisor: Krabec, Tomáš
Opponents: Rýdlová, Barbora
Thesis language: English
Abstract:
The issue of transfer pricing has become a major topic of discussion in recent years, particularly in relation to multinational corporations. With the rise of globalization, multinational corporations have been able to take advantage of various tax regulations in different countries, leading to concerns about fairness and equity in the international tax system. This master thesis aims to examine the correlation between transfer pricing strictness index and foreign investment, with a focus on selected European countries. An OLS regression is conducted using gretl software. This study is important because transfer pricing, the tax bases of countries, the movement of income and wealth across national borders, and the tax obligations placed on multinational corporations are all factors that need to be taken into account. The revenue and costs of related firms that operate under separate tax systems, and therefore their profits, and consequently the tax base of the country, are eroded to a large extent as a result of transfer pricing. Thus, both tax administrations and individuals can benefit from a better understanding of transfer pricing. The findings of this study could potentially help policymakers develop better strategies to regulate multinational corporations and ensure that the international tax system is fair and equitable for all countries.
Keywords: Strictness index; MNCs; Transfer pricing; FDI
Thesis title: Correlation between transfer pricing strictness index and foreign investment
Author: Jafarova, Khayala
Thesis type: Diplomová práce
Supervisor: Krabec, Tomáš
Opponents: Rýdlová, Barbora
Thesis language: English
Abstract:
The issue of transfer pricing has become a major topic of discussion in recent years, particularly in relation to multinational corporations. With the rise of globalization, multinational corporations have been able to take advantage of various tax regulations in different countries, leading to concerns about fairness and equity in the international tax system. This master thesis aims to examine the correlation between transfer pricing strictness index and foreign investment, with a focus on selected European countries. An OLS regression is conducted using gretl software. This study is important because transfer pricing, the tax bases of countries, the movement of income and wealth across national borders, and the tax obligations placed on multinational corporations are all factors that need to be taken into account. The revenue and costs of related firms that operate under separate tax systems, and therefore their profits, and consequently the tax base of the country, are eroded to a large extent as a result of transfer pricing. Thus, both tax administrations and individuals can benefit from a better understanding of transfer pricing. The findings of this study could potentially help policymakers develop better strategies to regulate multinational corporations and ensure that the international tax system is fair and equitable for all countries.
Keywords: Strictness index; Transfer pricing; FDI; MNCs

Information about study

Study programme: Finance and Accounting
Type of study programme: Magisterský studijní program
Assigned degree: Ing.
Institutions assigning academic degree: Vysoká škola ekonomická v Praze
Faculty: Faculty of Finance and Accounting
Department: Department of Corporate Finance

Information on submission and defense

Date of assignment: 11. 10. 2022
Date of submission: 18. 5. 2023
Date of defense: 16. 6. 2023
Identifier in the InSIS system: https://insis.vse.cz/zp/79049/podrobnosti

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