Transfer Pricing or Formula Apportionment? Tax-Induced Distortions of Multinationals’ Investment and Production Decisions

For mitigating the problems of transfer pricing formula apportionment (FA) is discussed intensively. However, FA could even be more harmful than transfer pricing because income shifting would require changing economic decisions instead of just taking advantage of accounting options. We analyze the impact of different international tax allocation regimes on a corporate group’s investment and production decisions. We show that FA offsets the advantages of decision decentralization as it reverses the separation of responsibilities. It is not clear whether FA is desirable from a fiscal or an entrepreneurial perspective. The effects of FA compared to transfer pricing depend strongly on the parameter setting under consideration, especially the decision procedure within corporate groups.capital budgeting, formula apportionment, international taxation, investment incentives, multinational groups, transfer pricing

Transfer pricing or formula apportionment? Tax-induced distortions of multinationals' investment and production decisions

Multinational groups (MNGs) produce a major part of global output. Further, a substantial fraction of international transactions happens to be internal, i.e., intermediate products and services are traded between group members. Thus, the problem of co-ordinating economic decisions like investment or production within such large entities has been widely recog-nized in the theoretical and empirical literature. The findings suggest that transfer prices are a widespread device for splitting up complex decision situations and allocating the responsibility for the resulting subproblems to several decision makers. Apart from its co-ordination function transfer pricing is also used for tax purposes. Legally independent group members realize intra-group sales and contribute to a single product. Taxable group profits are often allocated among the participating companies by means of transfer prices. In this case, from the group's perspective, transfer pricing is a device of international tax planning. Of course, national tax authorities have been aware of potential misuse. In Europe, the problem has become especially severe since the mid-European countries joined the EU. Due to the emerging large tax rate differentials, tax revenues of high-tax legislations eroded. For mitigating this problem formula apportionment (FA) is discussed intensively. Under FA, a common tax base is calculated and divided among the host countries in accordance with given apportionment factors. As a consequence, earnings management fails to re-allocate profits to low-tax legislations and tax base erosion seems to be stopped. However, FA could even be more harmful than transfer pricing because under FA income shifting would require changing economic decisions instead of just taking advantage of accounting options. In addition to the erosion of tax revenues, capital investments and employment could decrease in high-tax legislations. The goal of our paper is to analyze the impact of different international tax allocation regimes on the MNG's investment and production decisions. In our theoretical model, we derive optimal decisions under transfer pricing and FA. A prominent result of our analysis is that FA offsets the advantages of decision decentralization as it reverses the separation of responsibility areas. It is not clear whether FA is desirable from a fiscal or an entrepreneurial perspective. We show that the effects of FA compared to transfer pricing depend strongly on the parameter setting under consideration. One of the most important determinants is the internal decision procedure within the MNG. --Capital budgeting,Formula apportionment,International Taxation,Investment Incentives,Multinational Groups,Transfer Pricing

Synthesis and investigation of clusters of like-charged ions in OH-functionalized ionic liquids

In dieser Arbeit untersuchten wir systematisch die Bildung von kationischen (c-c)-Clustern in OH-funktionalisierten ionischen Flüssigkeiten (ILs) mit einer Vielzahl von experimentellen und theoretischen Methoden. Der Synthese der ILs folgte die umfassende Untersuchung der (c-c)-Cluster und deren Einflussfaktoren in der Gasphase, der kondensierten Phase und an der Fest/Flüssig-Grenzfläche. Mit IR-Spektroskopie, Neutronenbeugung und quantenchemischen Methoden konnten wir zeigen, dass die kooperativen Wasserstoffbrücken in (c-c)-Clustern stärker sind als die zwischen Kation und Anion.In this work, we systematically investigated the formation of cationic clusters in OH-functionalised ionic liquids (ILs) using a plethora of experimental and theoretical methods. The synthesis and characterization of well-suited sets of ILs was followed by a comprehensive study of cationic clusters and their influencing factors in the gas phase, the condensed phase and at the solid/liquid interface. Infrared spectroscopy, neutron diffraction and quantum chemical methods showed that cooperative hydrogen bonding in cationic clusters is counterintuitively stronger than between cation and anion

Gender bias in the assessment of physical activity in population studies

Summary: Objectives: Despite their generally more health promoting behaviours, women are found to participate less in physical activity than men. This study explores possible gender bias in measurement of physical activity in population studies. Methods: Data collected by telephone (CATI) from the Berne Lifestyle Panel in 1996 is utilised. A representative sample of the population of the city of Berne comprised N=1119 cases. Gender differences are assessed for the weekly frequency of three measurements of physical activities. Results: An indicator of sport and exercise showed higher physical activity among men, while the indicator of habitual physical activity showed higher rates of daily walking and biking among women. A combined indicator of general physical activity showed no significant gender differences. Conclusions: The results provide empirical evidence on potential risk of underestimation of physical activity among women and of misclassification with respect to high or low risk behaviour pattern

Technically assisted rehabilitation

Dieser Beitrag ist mit Zustimmung des Rechteinhabers aufgrund einer (DFG geförderten) Allianz- bzw. Nationallizenz frei zugänglich.This publication is with permission of the rights owner freely accessible due to an Alliance licence and a national licence (funded by the DFG, German Research Foundation) respectively

The Berne-Munich Lifestyle Panel: Background and baseline results from a longitudinal health lifestyle survey

Summary: The Berne-Munich Lifestyle Panel (BMLP) studies health relevant lifestyles among some 2000 adults in Switzerland and Germany. This paper introduces the theoretical background and empirical concept of the BMLP. Sociological theory provided the guidelines for the development of an empirical model that measures structures and dynamics of health lifestyles. Health lifestyles are explained as the product of the complex interplay between health related behaviours, orientations and social resources. Residents of Berne (Switzerland) and Munich (Germany) in the age between 55 and 65 years were contacted in 12 months periods and interviewed by telephone (CATI). The questionnaire comprised some 200 questions on selected aspects of health lifestyles and health status. Interviews were conducted in two waves in Munich (1996 and 1997) and three waves in Berne (1996/97/98). The paper reports findings from baseline data analysis and explores cultural differentiations with respect to the distribution of 1. health relevant behaviours, orientations and social resources, 2. triggers of lifestyle change (life events), 3. mediating factors (Health Locus of Control, Sense of Coherence). Initial results from the search for patterns of health behaviours are also reported. The findings show considerable differences but also impressive similarities in health lifestyle elements across the two samples. There is also preliminary evidence for meaningful patterns of health behaviours in the cohort under investigation. Moreover, the findings clearly demonstrate the need for a gender specific approach in the analysis of cultural differences in health behaviours and lifestyle

Like-likes-Like: Cooperative Hydrogen Bonding Overcomes Coulomb Repulsion in Cationic Clusters with Net Charges up to Q=+6e

Quantum chemical calculations have been employed to study kinetically stable cationic clusters, wherein the monovalent cations are trapped by hydrogen bonding despite strongly repulsive electrostatic forces. We calculated linear and cyclic clusters of the hydroxy-functionalized cation N-(3-hydroxypropyl) pyridinium, commonly used as cation in ionic liquids. The largest kinetically stable cluster was a cyclic hexamer that very much resembles the structural motifs of molecular clusters, as known for water and alcohols. Surprisingly, strong cooperative hydrogen bonds overcome electrostatic repulsion and result in cationic clusters with a high net charge up to Q=+6e. The structural, spectroscopic, and electronic signatures of the cationic and related molecular clusters of 3-phenyl-1-propanol could be correlated to NBO parameters, supporting the existence of “anti-electrostatic” hydrogen bonds (AEHB), as recently suggested by Weinhold. We also showed that dispersion forces enhance the cationic cluster formation and compensate the electrostatic repulsion of one additional positive charge

Cold acclimation has a differential effect on leaf vascular bundle structure and carbon export rates in natural Arabidopsis accessions originating from southern and northern Europe

Acclimation to low but non‐freezing temperature represents an ecologically important process for Arabidopsis thaliana but also for many other plant species from temperate regions. Cold acclimation comprises and affects numerous molecular and physiological processes and the maintenance of sugar supply of sink tissue by photosynthetically active source tissue is essential for plant survival. Here, changes in vascular bundle (VB) structure at the leaf petiole were analysed together with sucrose exudation rates before and after cold acclimation. Six natural Arabidopsis accessions originating from southern and northern Europe were compared. Photosynthetic efficiency, that is, maximum and effective quantum yield of photosystem II, revealed a significant effect of environmental condition. Only for northern accessions was a highly significant negative correlation observed between leaf sucrose exudation rates, xylem, and petiole cross‐sectional areas. Furthermore, only for northern accessions was a significant increase of VB and leaf petiole cross‐sectional area observed during cold acclimation. In contrast, variance of cross‐sectional areas of cold acclimated southern accessions was strongly reduced compared to control plants, while mean areas remained similar under both conditions. In summary, these findings suggest that natural Arabidopsis accessions from northern Europe significantly adjust sink strength and leaf VB structure to maintain plant growth and photosynthesis under low temperature