Law Commons^™

Re-Thinking First Principles Of Transfer Pricing Rules, John Ja Burke

John JA Burke

This Article rejects the conventional wisdom that “transfer pricing rules” are designed either to level the playing field between Multi-National Enterprises [MNEs] and medium sized enterprises or to prevent pre-meditated tax evasion by MNEs. Rather, this Article posits that “transfer pricing rules” [TPRs] are substitutes for diminished tariff revenue, or imposed artificial mark-ups, shifting costs to ultimate purchasers, and contradicting the fundamental rule of microeconomic theory of firm maximizing profits by equating marginal cost and marginal revenue. The debate about transfer pricing now centres on tweaking the “arm’s length principle”, safe harbour rules, and advance pricing agreements. Lost in this …