The impact of transfer pricing laws on import mis-pricing – Evidence from Denmark

Knoll, Bodo; Kruse-Becher, Sanne; Riedel, Nadine

Abstract

Many countries have recently introduced transfer pricing regulations to constrain multinational profit shifting from high-tax to lower-tax affiliates through strategic mis-pricing of intra-firm trade. We rely on rich administrative firm-level trade data for Denmark to show that tighter transfer pricing rules effectively reduce tax-motivated trade mis-pricing.