The Dark Side of Transfer Pricing: Its Role in Tax Avoidance and Wealth Retentiveness

In conventional accounting literature, ?transfer pricing? is portrayed as a technique for optimal allocation of costs and revenues amongst divisions, subsidiaries and joint ventures within a group of related entities. Such representations of transfer pricing simultaneously acknowledge and occlude how it is deeply implicated in processes of wealth retentiveness that enable companies to avoid taxes and facilitate the flight of capital. A purely technical conception of transfer pricing calculations abstracts them from the politico-economic contexts of their development and use. The context is the modern corporation in an era of globalized trade and its relationship to state tax authorities, shareholders and other possible stakeholders. Transfer pricing practices are responsive to opportunities for determining values in ways that are consequential for enhancing private gains, and thereby contributing to relative social impoverishment, by avoiding the payment of public taxes. Evidence is provided by examining some of the transfer prices practices used by corporations to avoid taxes in developing and developed economies

A Policy Program for Full Employment

Unemployment is the greatest economic problem facing Australia and other OECD countries. Yet it has received less attention than issues such as tax reform and exchange rate policy. In part this reflects a general air of fatalism. It is generally accepted that nothing can be done to generate substantial reductions in unemployment. This paper is based on the premise that the fundamental cause of rising unemployment is a decline in the demand for labor. This in turn may be traced to the failure of the publicly financed community services sector (primarily health and education) to continue the expansion of the post-war boom, thereby compensating for the contraction of employment in older sectors such as manufacturing. A second premise is that the contraction in the public sector, and particularly in publicly financed community services, has been greater than is consistent with efficiency and welfare objectives. Both of these premises are defended in more detail in Quiggin (1993). It is argued that both an active labor market policy and an expansion of the publicly financed community services sector, sufficient to generate a substantial reduction in employment, is feasible. A number of proposals for financing such a program ar

Effects of taxation for option writers: an Australian perspective

Writing an option is a taxable event for Australian investors. This method of taxation penalizes investors who hold open short option positions over the tax year end by accelerating their tax liability relative to the timing of the economic gain from writing options. This paper examines the levels of open interest in the Australian Stock Exchange over the change in financial year to determine whether investors time their transactions to avoid this tax acceleration. The results show that level of open interest is lower in the last month of the financial year after controlling for non-tax determinants of option demand. Copyright (c) The Authors Journal compilation (c) 2007 AFAANZ.

Report of the Joint committee on internal revenue taxation.

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