The Economics of Advance Pricing Agreements
|Title:||The Economics of Advance Pricing Agreements||Authors:||Becker, Johannes
Davies, Ronald B.
|Permanent link:||http://hdl.handle.net/10197/6151||Date:||Nov-2014||Online since:||2014-11-12T10:31:25Z||Abstract:||Advance pricing agreements (APAs) determine transfer prices for intra-firm transactions in advance. This paper interprets these contracts as a means to overcome a hold-up problem that occurs because governments cannot commit to non-excessive future tax rates. In addition, with private information, just as in practice, our APAs will be complex and require lengthy negotiations. Never- theless, implemented APAs lead to a Pareto improvement even when all agents are risk neutral. However, not all efficient APAs are concluded in equilibrium. International agreements to avoid double taxation will likely reduce the number of realized APAs.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP14/19||Copyright (published version):||2014 the authors||Keywords:||Advance pricing agreements; Corporate taxation; Multinational firms; Transfer pricing||Other versions:||http://www.ucd.ie/t4cms/WP14_19.pdf||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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