Working Paper
Centralized vs. De-centralized Multinationals and Taxes
Søren Bo Nielsen, Pascalis Raimondos, Guttorm Schjelderup
CESifo, Munich, 2005
CESifo Working Paper No. 1586
CESifo, Munich, 2005
CESifo Working Paper No. 1586
The paper examines how country tax differences affect a multinational enterprise’s choice to centralize or de-centralize its decision structure. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs - here, as a strategic pre-commitment device and a tax manipulation instrument -, we show that (de-)centralized decisions are more profitable when tax differentials are (small) large.
CESifo Category
Public Finance
Public Finance
Keywords: centralized vs. de-centralized decisions, taxes, MNEs
JEL Classification: F230,H250,L230