FEEM working papers "Note di lavoro" series
2020 .16

Debt and Transfer Pricing: Implications on Business Tax Policy


Authors: Nicola Comincioli, Paolo M. Panteghini, Sergio Vergalli
Series: 2030 Agenda
Editor: Sergio Vergalli
Keywords: Capital Structure, Default Risk, Business Taxation and Welfare
JEL n.: H25, G33, G38

Abstract

In this article we introduce model to describe the behavior of a multinational company (MNC) that operates transfer pricing and debt shifting, with the purpose of incrementing its value, intended as the sum of equity and debt. We compute, in a stochastic environment and under default risk, the optimal shares of profit and debt to be shifted and show how they are a ected by exogenous features of the market. In addition, by means of a numerical analysis, we simulate and quantify the benefit arising from the exploitation of tax avoidance practices and study the corresponding impact on MNC's fundamental indicators. A wide sensitivity analysis on model's parameters is also provided.

***

Suggested citation: Comincioli, N., P. M. Panteghini, S. Vergalli, (2020), 'Debt and Transfer Pricing: Implications on Business Tax Policy', Nota di Lavoro 16.2020, Milano, Italy: Fondazione Eni Enrico Mattei

Download file
Download PDF file

FEEM Newsletter & Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter & Update. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree