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Master Thesis

Artificial intelligence and transfer pricing : promising changes towards compliance, evidence from European MNEs. The effect of multi-nationality, tax havens, and intangible assets on transfer pricing compliance of European MNEs and the role of artificial intelligence in achieving compliance

Abstract : Tax non-compliance scandals have attracted the attention of media accounts, and profit shifting activities have been at the top of international policy agenda for several years. Several channels exist for multi-national companies (MNCs) to shift profits from high- to low-tax jurisdictions. Yet, transfer pricing and intangible assets remain the most important channel for MNCs to use for profit shifting, and therefore, to minimize their tax liabilities. In an attempt to combat these practices and achieve tax compliance, the Organization of Economic Cooperation and Development (OECD) launched BEPS Action Plans. This project provides guidelines for MNCs on pricing their intra-firm transactions, especially those involving intangibles. An important guideline is the “Arm‟s-Length Principle” which requires that prices of intra-firm transactions should be the same as the ones charged for independent neutral parties (i.e. it should be the market price). At a first blush, this could be an easy task. However, extracting arm‟s-length prices (particularly for intangible assets) could be difficult. MNCs are required to find relevant data for independent transactions involving similar products. This could negatively affect MNCs compliance with the tax rules. Therefore, artificial intelligence is used to aid companies in their transfer pricing process from data extraction, computation, visualization, to transfer pricing documentation. Hence, this study aims to study the determinants of transfer pricing in European MNCs, because understanding these determinants is crucial to understand how artificial intelligence should be applied to achieve compliance.
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Master Thesis
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https://dumas.ccsd.cnrs.fr/dumas-03002981
Contributor : Grenoble Iae <>
Submitted on : Friday, March 19, 2021 - 10:39:43 AM
Last modification on : Tuesday, April 6, 2021 - 3:23:33 AM

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  • HAL Id : dumas-03002981, version 1

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Rewa Makke. Artificial intelligence and transfer pricing : promising changes towards compliance, evidence from European MNEs. The effect of multi-nationality, tax havens, and intangible assets on transfer pricing compliance of European MNEs and the role of artificial intelligence in achieving compliance. Business administration. 2020. ⟨dumas-03002981⟩

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