عوامل مؤثر بر تهاجم قیمت گذاری انتقالی : شواهد تجربی از شرکت های استرالیا

This study examines the major determinants of transfer pricing aggressiveness. Based on a hand-collected sample of 183 publicly-listed Australian firms for the 2009 year, our regression results show that firm size, profitability, leverage, intangible assets, and multinationality are significantly positively associated with transfer pricing aggressiveness after controlling for industry-sector effects. Our additional regression results also indicate that firms augment their transfer pricing aggressiveness through the joint effects of intangible assets and multinationality.

The purpose of this study is to examine the major determinants of transfer pricing3 aggressiveness as a means by which firms can significantly reduce their corporate tax liabilities. Multinational firms can structure and price payments and intra-firm trade in such a way as to facilitate tax avoidance, principally by strategically setting artificial inter-company transfer prices (Grubert and Mutti, 1991, Grubert, 2003, Clausing, 2006 and Usmen, 2012). The aim of Australia’s transfer pricing rules is to ensure that related party international transactions are conducted on an arm’s length basis so that profits are not artificially deflated (inflated) in high-tax jurisdictions (low-tax jurisdictions) (Hamilton et al., 2001). Aggressive transfer pricing activity is reflected by extensive non-arm’s length transactions between related parties. We are motivated in this study to evaluate the major determinants of transfer pricing aggressiveness because audit activity by tax authorities and economic analysis by treasury departments have collectively found that mispricing of related party transactions is a major factor contributing to a progressive erosion of corporate tax revenue.4 Transfer pricing risks are considered high-priority in Australia by the Australian Taxation Office (ATO) which recently requested information from 150 large (i.e. greater than AUD100 million turnover) corporate groups on: restructuring, financing relating to guarantee fees and intra-group loans, services provided and received, and related party transactions (ATO, 2010). These risk reviews stem from transfer pricing audits carried out by the ATO in 2001–2006 which resulted in amended tax assessments of AUD1.33 billion, with an additional AUD1.25 billion in disallowed tax losses (ATO, 2010). The nature and outcome of review and audit activity by the ATO over the past decade is indicative of the large tax risks related to transfer pricing. Transfer pricing also appears to be a major issue globally. For instance, a recent Ernst and Young (2011) survey found that tax risks associated with transfer pricing constitute one of the most critical and challenging issues facing firms internationally.5 Transfer pricing is economically important to multinational firms with flow-on effects on earnings, dividends, return on capital and share prices (Sikka and Willmott, 2010).6 In the Australian context, transfer pricing is economically important because Australia is an active global trader of goods and services (The Treasury, 2011).7 Based on a hand-collected sample of 183 publicly-listed Australian firms for the 2009 year, our regression results demonstrate that firm size, profitability, leverage, intangible assets, and multinationality are significantly positively associated with transfer pricing aggressiveness after controlling for industry-sector effects. Our additional regression results also show that firms enhance their transfer pricing aggressiveness via the joint effects of intangible assets and multinationality. This study contributes to the literature in several important ways. First, it extends the literature on transfer pricing practices of multinational firms by providing empirical evidence of the key determinants of transfer pricing aggressiveness. Second, a measure of transfer pricing aggressiveness is constructed based on attributes regularly emphasized in the ATO’s audit programs and issues scrutinized by the Australian Securities and Investment Commission (ASIC). Construction of a transfer pricing aggressiveness index provides a methodological contribution that extends beyond Australian corporate transfer pricing research because this index permits replication in other jurisdictions (e.g. Canada, New Zealand, the U.K. and the U.S.). Third, this study investigates the interaction effect between intangible assets, multinationality and tax havens to determine whether these variables are used concurrently to augment transfer pricing aggressiveness. To the best of our knowledge, these issues have not been addressed empirically in the literature. Finally, this study provides valuable information about the major determinants of transfer pricing aggressiveness to policymakers and regulators who should find our results useful in terms of developing policy and regulation. The remainder of the paper is organized as follows. Section 2 considers the theory and develops hypotheses. Section 3 describes the research design, and Section 4 reports the empirical results. Finally, Section 5 concludes the paper.

This study examines the major determinants of transfer pricing aggressiveness of publicly-listed Australian firms. Our regression results show that firm size, profitability, leverage, intangible assets and multinationality are significantly positively associated with transfer pricing aggressiveness after controlling for industry-sector effects. Moreover, our additional regression results indicate that firms augment transfer pricing aggressiveness through the joint effects of intangible assets and multinationality. Whilst enhanced disclosure by firms regarding the pricing and commercial basis of related-party transactions would be helpful from a tax administration viewpoint, the ATO and ASIC are aware of the burden already faced by Australian firms in complying with the complex transfer pricing rules. The quality of documentation about transfer pricing arrangements varies greatly from one firm to another. However, the provision of specific documentation by management in regards to arm’s length pricing contributes to a more effective tax administration and greater transparency of the transfer pricing rules to analysts, shareholders and potential investors. This may also assist in reducing a firm’s tax compliance burden and the need to book income tax reserves and tax liabilities with respect to anticipated tax audits. This study is subject to several limitations. First, our sample is drawn from publicly-listed firms because data is not available for private firms. Second, our transfer pricing aggressiveness index measure is drawn from aggregated financial data at the firm-level, so transactional transfer pricing data may be obscured within a broader ‘noise’ of aggregated financial data that could hinder our ability to isolate specific elements of transfer pricing. It is possible that some firms may not have disclosed complete details of related party transactions due to materiality reasons, or because the nature of transactions may not comply with debt covenant arrangements or may impede a firm from undertaking further capital raisings. However, as we are dealing with publicly-listed Australian firms, materiality is unlikely to be a major issue in our study. Moreover, these firms are also likely to address disclosure requirements in accordance with AASB 124 Related Party Disclosures ( AASB, 2008). Future research could consider the determinants of transfer pricing aggressiveness across different jurisdictions internationally. We encourage further empirical research in this area.