American Journal of Business, Economics and Management

2013; 1(1): 25-29 Published online January 30, 2014 (http: !!!"opens#ien#eonline"#o$ %ournal a%be$)

Tax avoidance through tax havens and transfer pricing -A case study in Indonesia
&u'anto (anoto
)sian Parti#ipation in *e$ote +ndustry ,e-y ()P*+,) .enter" Jalan /ebas Pa%a', *iau, +ndonesia

Email address
su'anto"tanoto01$2"#o$

To cite this article

&u'anto (anoto" (a2 )-oidan#e throu1h (a2 3a-ens and (rans4er Pri#in1 -) .ase &tudy in +ndonesia" American Journal of Business, Economics and Management" 5ol" 1, 6o" 1, 2013, pp" 25-29"

Abstract
(a2 $ana1e$ent is si$ply the pro#ess o4 arran1in1 one7s a#tions in li1ht o4 their potential ta2 #onse8uen#es" (a2$oti-ated trans4er pri#in1 has attra#ted !orld-!ide attention be#ause o4 lo!-ta2 %urisdi#tions and the -olu$e o4 the a#ti-ities operated throu1h $ultinational #orporations" 9ith a #ase study in +ndonesia, a #orporation has $any instru$ents 4or shi4tin1 pro4its throu1h trans4er pri#in1, and ta2 ha-ens pro-ide 1reat opportunity 4or this" (a2 ha-ens #reate the threat o4 #apital 4li1ht and in#o$e shi4tin1 4ro$ $ediu$-ta2 #ountry in +ndonesia to no ta2 #ountries" (a2 #onsiderations on international operation stron1ly in4luen#e de#isions on !here to in-est, !hat 4or$ o4 business or1ani:ation to e$ploy, ho! to 4inan#e, !hen and !here to re#o1ni:e ele$ents o4 re-enues and e2pense, and !hat trans4er pri#es to #har1e" 9ith the possible e2#eption o4 #ost o4 1oods sold, ta2ation is the lar1er e2pense o4 $ost businesses" +t $a'es sense 4or $ana1e$ent to $ini$i:e international ta2es !hene-er possible, throu1h ta2 ha-ens #ountry, trans4er pri#in1, and pro4it shi4tin1"

ey!ords
(a2 3a-en, (rans4er Pri#in1, .P;, /ritish 5ir1in +sland

"# Introduction
(a2 $ana1e$ent is si$ply the pro#ess o4 arran1in1 one7s a#tions in li1ht o4 their potential ta2 #onse8uen#es" +t should be e$phasi:ed that the ta2 #onse8uen#es so$e ti$es turn on ho! a parti#ular transa#tion is stru#tured < that is, 4or$ is o4ten #ontrollin1" (he ob-ious 1oal o4 $ost ta2 $ana1e$ent is the e44i#ient the $ini$i:ation o4 the a$ount that a person or other entity $ust trans4er to the 1o-ern$ent" (he le1al e44i#ient $ini$i:ation o4 ta2es is usually re4erred to as =ta2 a-oidan#e>, !hile the use o4 ille1al $eans to e44i#ient $ini$i:e ta2es re4erred to as =ta2 e-asion> and should be ne-er be tolerated" (a2-$oti-ated trans4er pri#in1 has attra#ted !orld attention o!in1 to the e2isten#e o4 lo!-ta2 %urisdi#tions and the -olu$e o4 the a#ti-ities o4 $ultinational #orporations" &u#h #orporations ha-e $any instru$ents 4or shi4tin1 pro4its throu1h trans4er pri#in1, and ta2 ha-ens pro-ide a$ple opportunity 4or this" (a2 ha-ens pose the threat o4 #apital 4li1ht and in#o$e shi4tin1 4ro$ hi1h-ta2 #ountries" ) pheno$enon that has e$er1ed 4ro$ the philosophy that 4orei1n sour#e in#o$e should not be ta2ed at all or should be ta2ed only !en de#lared a di-idend is the ta2 ha-en" ) ta2 ha-en is de4ined as =a pla#e !here 4orei1ners $ay re#ei-e in#o$e or o!n assets !ithout payin1 hi1h rate o4 ta2 upon the$> (a2 ha-ens o44er a -ariety o4 bene4its, in#ludin1 lo! ta2es or no ta2es on #ertain #lassess o4 in#o$e" /e#ause o4 these bene4its, thousands o4 so-#alled $ailbo2 #o$pany ha-e sprun1 up in su#h e2oti# pla#es as ,i#htenstein, 5anuatu, and the 6etherlands )ntilles" &o$e e2a$ples o4 types o4 ta2ha-en #ountries are as 4ollo!s: 1" .ountries !ith no in#o$e ta2es, su#h as /aha$as, /er$uda, and the .ay$an +slands" 2" .ountries !ith ta2es at lo! rates, su#h as the /ritish 5ir1in +slands" 3" .ountries that ta2 in#o$e 4ro$ do$esti# sour#es but

2?

&u'anto (anoto: (a2 )-oidan#e throu1h (a2 3a-ens and (rans4er Pri#in1 -) .ase &tudy in +ndonesia

e2e$pt in#o$e 4ro$ 4orei1n sour#es, su#h as 3on1 @on1, ,iberia and Pana$a" 4" .ountries that allo! spe#ial pri-ile1es: 1enerally their suitability as ta2 ha-ens is li$ited" (o ta'e ad-anta1e o4 a ta2 ha-en, a #orporation !ould ordinarily set up a subsidiary in the ta2 ha-en #ountry throu1h !hi#h di44erent 4or$s o4 in#o$e !ould pass" (he 1oal is to shi4t in#o$e 4ro$ hi1h-ta2 to ta2 ha-en #ountries" (his is nor$ally a##o$plished by usin1 the ta2 ha-en subsidiary as an inter$ediary"

unli'ely that a D6. !ill be able to a##o$plish all ob%e#ti-es !ith a sin1le trans4er pri#in1 strate1y" Priorities usually in#lude the $ini$i:ation o4 !orld!ide in#o$e ta2es and i$port duties"

&# 'ase (tudy )Indonesia*

)n +ndonesia $anu4a#turer ()sian )1ri) #ould sell 1oods dire#tly to a distributor in Eer$any and #on#entrate the pro4its in +ndonesia, or it #ould sell the 1oods to a ta2 ha-en subsidiary at #ost and then sell the 1oods to the Eer$an distributor, thus #on#entratin1 the pro4its in the ta2 ha-en subsidiary !ith no in#o$e ta2es or !ith ta2 at lo! rates" A-ery ta2 ha-en has ad-anta1e, su#h as ha-in1 a lo! or :ero rate o4 ta2 on all or #ertain #ate1ories o4 in#o$e, and o44erin1 a #ertain a$ount o4 ban'in1 or #o$$er#ial se#re#y" and disad-anta1es dependin1 on !hat you hope to a#hie-e" (he 13 indi#ators identi4ied here 4or %ud1in1 a ta2 ha-en7s potential !ill help you 1au1e ho! ea#h potential ta2 ha-en sta#'s up a1ainst your 1oals" (he ob%e#t, o4 #ourse, is to 4ind a ta2 ha-en !ith the $a2i$u$ nu$ber o4 ad-anta1es that satis4y your re8uire$ents" (1) ta2 stru#ture (2) politi#al and e#ono$i# stability (3) e2#han1e #ontrols (4)ta2 treaties (5) 1o-ern$ent attitude (?) $odern #orporation la!s (G) si$ple in#orporation pro#edures and #o$petiti-e 4ees (H) #o$$uni#ations and transportation (9) ban'in1 and pro4essional ser-i#es (10) An1lish #o$$on la! (11) se#re#y and #on4identially (12) in-est$ent in#enti-es and opportunities (13) lo#ation )sian )1ri has 1? subsidiary #o$panies in +ndonesia that $ost o4 these #o$panies produ#ed .rude Pal$ ;il (.P;) 4or e2port and 5 #o$panies in (a2 3a-ens #ountries as a44iliated #o$panies (so-#alled $ailbo2es #o$pany) to $ini$i:e #orporate ta2es 4or the 1roup as a !hole" ) ne#essary ele$ent o4 su#h strate1y is the pri#es at !hi#h 1oods and ser-i#es are trans4erred bet!een 1roup #o$panies" Pro4its 4or the #orporate syste$ as a !hole #an be in#reased by settin1 hi1h trans4er pri#es on #o$ponents shipped 4ro$ subsidiaries in relati-ely lo! ta2 #ountries, and lo! trans4er pri#e on #o$ponent shipped 4ro$ subsidiaries in relati-ely hi1h ta2 #ountries )sian )1ri Pro4it &hi4tin1 (he trans4er pri#in1 syste$ #an be used to shi4t ta2able pro4its 4ro$ a #ountry !ith a hi1h ta2 rate to a #ountry !ith a lo!er ta2 rate: the result is that a4ter ta2es the D6. retain $ore pro4its" (here are1? (si2teen) )sian )1ri Eroup .o$panies in +ndonesia, $anu4a#tures 1oods (.P;) and $ost o4 the .P; 4or sale o-erseas" Iinished 1oods (.P;) are trans4erred 4ro$ )sian )1ri Eroup to its !holly o!ned sales a44iliate 4or o-erseas sales throu1h 5 (4i-e) so-#alled $ailbo2 #o$panies in (a2 3a-ens #ountry, usin1 a lo! $ar'up poli#y and usin1 a hi1h $ar'up poli#y 4or the real buyer" (he lo! $ar'up poli#y results in lar1er preta2 in#o$e, in#o$e ta2es, and net in#o$e per unit in the sellin1 #ountry" ;n the other hand, the hi1h $ar'up poli#y has the opposite e44e#t, that is, hi1her ta2able in#o$e, in#o$e ta2es, and net pro4it per unit in the $anu4a#turin1 #ountry" (he a44iliate

$# Transfer %ricing
)##ordin1 to a ne! sur-ey by Arnst B Coun1 that trans4er pri#in1 is the $ost i$portant international ta2 issue that $ultinational enterprises (D6As) no! 4a#e" (rans4er pri#in1 in-ol-es the pri#e at !hi#h transa#tions bet!een units o4 $ultinational #o$panies ta'e pla#e, in#ludin1 the inter#o$pany trans4er o4 1oods, property, ser-i#es, loans, and leases" (rans4er Pri#in1 has attra#ted in#reasin1 !orld!ide attention" (he si1ni4i#an#e o4 the issue is ob-ious !hen !e re#o1ni:e that trans4er pri#in1 (1) is #ondu#ted on a relati-ely lar1er s#ale internationally than do$esti#ally (2) is a44e#ted by $ore -ariables than are 4ound in a stri#tly do$esti# settin1 (3) -aries 4ro$ #o$pany, industry to industry, and #ountry to #ountry, and (4) a44e#ts so#ial, e#ono$i# and politi#al relationships in $ultinational business entities and so$eti$es, entire #ountries Eo-ern$ents around the !orld re8uire trans4er pri#in1 $ethods base on the ar$7s-len1th prin#iple" (hat is a $ultinational Fs business in di44erent #ountries are ta2ed i4 they !ere independent 4ir$s operatin1 at ar$7slen1th 4ro$ ea#h other" (he #o$ple2 #al#ulation o4 ar$7s-len1th pri#es is less rele-ant today 4or 1lobal #o$panies be#ause 4e!er o4 the$ operate this !ay" )n ar$7s-len1th pri#e is one that an unrelated party !ould re#ei-e 4or the sa$e or si$ilar ite$ under identi#al or si$ilar #ir#u$stan#es" )##eptable ar$7s-len1th pri#in1 $ethod in#lude (1) #o$parable un#ontrolled pri#in1 (2) resale pri#in1 (3) #ost-plus pri#in1, and (4) other pri#in1 $ethods" )n e$er1in1 #onsensus a$on1 1o-ern$ents -ie!s ar$7s-len1th pri#in1 as the appropriate standard in #al#ulatin1 pro4its 4or ta2 purposes" 3o!e-er, #ountries -ary in ho! ar$7s-len1th pri#in1 is interpreted and i$ple$ented, )s a result, it is so$e!hat 4luid #on#ept internationally (rans4er Pri#in1 s#he$es desi1ned to $ini$i:e 1lobal ta2es o4ten distort the $ultinational #ontrol syste$" 9hen ea#h subsidiary is e-aluated as a separate pro4it #enter, su#h pri#in1 poli#ies #an result in $isleadin1 per4or$an#e $easures that 1enerally lead to #on4li#ts bet!een subsidiary and enterprise 1oals" (he international trans4er pri#in1 syste$ $ust also atte$pt to a##o$plish ob%e#ti-es that are irrele-ant in a purely do$esti# operation (hese ob%e#ti-e in#lude (1) !orld!ide in#o$e ta2 $ini$i:ation (2) $ini$i:ation o4 !orld!ide i$port duties (3)a-oidan#e o4 4inan#ial restri#tions, (4) $ana1in1 #urren#y 4lu#tuations, and (5) !innin1 host #ountry 1o-ern$ent appro-al" +t is

)$eri#an Journal o4 /usiness, A#ono$i#s and Dana1e$ent 2013; 1(1): 25-29

2G

#o$panies in (a2 3a-ens .ountry are li'ely represent the $anu4a#turin1 #o$pany, there is no proble$ o4 lar1er preta2 in#o$e sin#e the ta2 rate i$poses in ta2 ha-ens #ountry are -ery lo!: the result is that a4ter ta2es pro4it the )sian )1ri Eroup retain a bi1 pro4it" (he #hoi#e o4 or1ani:ational 4or$ 4or #ondu#tin1 4orei1n operation is also in4luen#ed by #ountry in#enti-es en#oura1e to desi1ned #ertain types o4 a#ti-ities #onsidered bene4i#ial to the national e#ono$y" (he lo#ation o4 produ#tion and distribution syste$s also o44er ta2 ad-anta1es" (hus 4inal sales o4 1oods or ser-i#es #an be #hanneled throu1h a44iliates lo#ated in %urisdi#tion that o44er ta2 shelter or de4erral" +n these #ase, parent #orporation ()sian )1ri +ndonesia) ships the produ#t (.P;) dire#tly 4ro$ 1? (si2teen) 4a#tories )sian )1ri Eroup .o$panies in +ndonesia to the Auropean buyer, but also $a'es a paper sale o4 the 1oods to its !holly o!ned a44iliate as 4orei1n sales #orporations (I&.s) in Da#ao, Dauritius, and /ritish 5ir1in +sland" (he pay$ent 4ro$ the buyer is routed throu1h 3on1 @on1 .o$panies that arran1e ho! $u#h $oney !ill be sent to )sian )1ri +ndonesia as an in#o$e 4or ta2 purposes"

transa#tion dire#tly throu1h /5+ #o$panies, but sin#e 2003 by #o$panies in 3on1 @on1 and Da#ao"

.# %aper 'ompanies
)sian )1ri setup paper (Dailbo2) .o$panies in order to per4or$ a -ariety o4 transa#tions abroad, in (a2 3a-en #ountries: 3on1 @on1, /ritish 5ir1in +slands, and Da#ao" (hese #o$panies are %ust $ailbo2 #o$panies, be#ause: 1" +n a 3on1 @on1 sta44 %ust pla#ed the phone re#ei-er" (he phone nu$ber is di44erent, but the 4a2 nu$ber usin1 the sa$e line Aast (rade ,td huntin1" at 2G01 Elou#ester (o!er, (he ,and$ar', 3on1 @on1" 2" )uthority si1nature 4or the ban' a##ounts in 3on1 @on1 and Da#ao are the sa$e" 3" ;4 the audit report in 3on1 @on1 'no!n be4ore 2004, these #o$panies !ere non-a#ti-e" +n 4a#t, in the report )sian )1ri Eroup reported al$ost all pal$ oil e2ports are sold to 3on1 @on1 #o$panies" Presu$ably, these are one-sided transa#tions, not reported in#o$e in 3on1 @on1"

+# Modes of ,perations
(here are three $odes: +#"# -ictitious 'ost .reated -arious types o4 #osts in do:ens o4 4i#titious )sian )1ri Eroup subsidiaries, #alled Ja'arta .ost (buildin1 roads, #leanin1 la!ns, #ontra#tors, et#")" .osts not really paid, but deposited into a personal a##ount under the na$e o4 3aryanto 9isastra ,u'e Addy (3)*A,) and ,u'e Addy J%o'o ;eto$o (A,J;)" &ubse8uently the $oney !ere trans4erred to (anoto7s o-erseas in-est$ent #o$pany (o44shore #o$pany)" +#$# -ictitious Transactions .reated transa#tion hed1in1 #ontra#ts hed1in1 (4or!ard #ontra#t) .P; sale or e2#han1e bet!een the )sian )1ri Eroup #o$pany in +ndonesia !ith a44iliates abroad" (his alle1edly 4i#titious transa#tions !as ba#'dated" (ransa#tions are $ade in su#h a !ay (an +ndonesian #o$pany sellin1 at a lo! pri#e and buy at hi1h pri#es, other!ise 4orei1n #o$panies sellin1 at a hi1h pri#e and buy at lo! pri#es) so that the +ndonesian #o$panies al!ays losses and #o$pany abroad is al!ays pro4it".onse8uently, there is a trans4er o4 $oney 4ro$ +ndonesia to o-erseas #o$panies" +#&# Transfer %ricing .P; !as sold at lo! pri#e to a44iliated (4i#titious) #o$panies in 3on1 @on1, /ritish 5ir1in +slands, Da#ao" Iro$ this 4i#titious #o$pany, the .P; !as sold at a hi1her ($ar'et) pri#e to real buyers" /y doin1 so, they are 4ree 4ro$ payin1 hi1her ta2es in the #ountry" /e4ore 2003, the

/# 0here does the Money -lo!1

Aa#h year, 4i-e o4 the *a%a Earuda Das Eroup (*ED) #o$panies al!ays $a'e a plan: ho! $u#h $oney to be #ashed in to *ED" +n 200?, 4or e2a$ple, t!o-parent #o$pany )sia Pa#i4i# *esour#es +nternational ,td" ()P*+,) and )sian )1ri Eroup, ea#h has set a deposit o4 G0 per #ent o4 its annual #ash 4lo! to the *ED" +ts -alue is appro2i$ately K"&" L 30 $illion (*p 2G3 billion) 4or )P*+, and K"&" L H $illion (K&J G2"H billion) per $onth 4or the )sian )1ri" (o a#hie-e the tar1ets, a -ariety o4 !ays #an be done, in#ludin1 a$on1 others, by raisin1 the (4i#titious) #ost and redu#ed re-enue (trans4er pri#in1) or redu#ed pro4it, so the )sian )1ri ta2 burden in the #ountry !ill be redu#ed" (he results 4ro$ the pro4it trans4er #o$panies in +ndonesia to a44iliated #o$panies abroad (presu$ably throu1h trans4er pri#in1 and 4i#titious ed1in1 #ontra#ts transa#tions), su#h as the Elobal )d-an#e ;il B Iats ,td" (Da#ao) and the )sian )1ri )badi ;ils and Iats ,td" or )));I (/ritish 5ir1in +slands)" (he $oney !as then 4or!arded to the )sian )1ri as a di-idend pay$ent" )sian )1ri deposited the di-idends to Iirst +sland (rust .o$pany ,td" Iit#o (Dauritius) dan (reston +nternational ,td" (/ritish 5ir1in +slands)" )##ordin1 to the do#u$ent o4 the Je#laration o4 Klti$ate /ene4i#ial ;!nership (reston (21 )pril 2004) and the Je#laration o4 (rust Iit#o (2? &epte$ber 2003), the t!o #o$panies are o!ned by &u'anto !ith (inah /in1ei (!i4e) and their t!o dau1hters: +$elda (anoto and /elinda (anoto" )t the re8uest o4 (reston and Iit#o, di-idends !ere trans4erred to a nu$ber o4 &u'anto7s o-erseas #o$panies: Eoalead ,td", 3ead#orp +nternational ,td"", At#"" Jeposit pay$ent 4ro$ the 4i#titious #o$panies to

2H

&u'anto (anoto: (a2 )-oidan#e throu1h (a2 3a-ens and (rans4er Pri#in1 -) .ase &tudy in +ndonesia

a##ounts held by 3aryanto )sian )1ri 9isastra B ,u'e Addy (3)*A,) in /an' Per$ata and ,u'e Addy B J%o'o ;eto$o (A,J;) at /an' /u$iputera" (his $oney is e-entually deposited into the Eoalead ,td" a##ount (/an#a +ntesa /an', 3on1 @on1), !hi#h is o!ned by (anoto"

2# 'onclusions
(he #hoi#e o4 or1ani:ational 4or$ 4or #ondu#tin1 4orei1n operation is also in4luen#ed by #ountry in#enti-es en#oura1e to desi1n #ertain types o4 a#ti-ities #onsidered bene4i#ial to the national e#ono$y" (he lo#ation o4 produ#tion and distribution syste$s also o44ers ta2 ad-anta1es" (hus 4inal sales o4 1oods or ser-i#es #an be #hannelled throu1h a44iliates lo#ated in %urisdi#tion that o44er ta2 shelter or de4erral" +n these #ase, parent #orporation ()sian )1ri +ndonesia) ships the produ#t (.P;) dire#tly 4ro$ 1? (si2teen) 4a#tories )sian )1ri Eroup .o$panies in +ndonesia to the Auropean buyer, but also $a'es a paper sale o4 the 1oods to its !holly o!ned a44iliate as 4orei1n sales #orporations (I&.s) in Da#ao, Dauritius, and /ritish 5ir1in +sland" (he pay$ent 4ro$ the buyer is routed throu1h 3on1 @on1 .o$panies that arran1e ho! $u#h $oney !ill be sent to )sian )1ri +ndonesia as an in#o$e 4or ta2 purposes, +n respondin1 to the the proble$ o4 shi4tin1 o4 re-enues abo-e and also de$ands o4 a 1ro!in1 $ar'et e#ono$y, the resultin1 in#rease in the nu$ber o4 ta2payers, and the need to establish the le1iti$a#y o4 ta2 #olle#tion, 4ro$ year 200G up to 2010, our #ountry has been re4or$ed 4our ta2 la!s, e"1" Eeneral Pro-isions and (a2 Pro#edure ,a!, +n#o$e (a2 ,a!, 5alue )dded (a2 and &ales (a2 on ,u2ury Eoods ,a! and *e1ional (a2 ,a!" 9hile in relation !ith the trans4er pri#in1, 4or a #ertain #o$panies $y #ountry also arran1es an )d-an#e Pri#in1 )1ree$ents ()P)s) !hereby a $ultinational and our ta2in1 authority -oluntarily ne1otiate an a1reed trans4er pri#in1 $ethodolo1y that is bindin1 on both parties"

(ransa#tion 2: ;#tober 2005 a" P( &upra Datra )badi sell 2500 D( pal$ 'ernel oil (P@;) to (!in /onus Adible ;il B Iats ,td" (3on1 @on1) at a pri#e o4 K"&" L 4?0 D( or !orth a total o4 K"&" L 1,150,000 (+n-oi#e 6o"" 09?02 + 21 14 05)" b" Jouble /onus P@; then sell it to )sian )1ri Aternal ;ils B Iats ,td" (/5+) at a pri#e o4 K"&" L 4?2"5 D( -alued at a total o4 K"&" L 1,15?,250 (+n-oi#e 6o"" 09,13H,005 (9+6-+)" Eains re#orded K"&" L ?,250" #" )));I (/5+) and then sell P@; to Pal$#o ;il Dill &dn /hd" (Dalaysia) 4or K"&" L 535 D( or !orth a total o4 K"&" L 1,310,G50 (+n-oi#e 6o"" 10001 + 95 14 05)" Eains re#orded K"&" L 154,500" (ransa#tion 3: )u1ust 2001 a P( +nti +ndosa!it &ubur sell 999"3 $etri# tons o4 #rude pal$ oil to )sian )1ri Aternal ;ils B Iats ,td" (/5+) 4or K"&" L 192"5 D( or K"&" L 192,3?5"25 (+n-oi#e 6o" 004 A ++&-J/ 0H 01) b )));I (/5+) to sell 999"3 $etri# tons o4 .P; to .ar1ill (&in1apore) 4or K"&" L 220 D( or K"&" L 219,H4? (+n-oi#e 6o"" 23,10H-&.P; +)" )));I pro4it 4ro$ this transa#tion (/5+) o4 K"&" L 2G,4H0"G5

3eferences
M1N /arber 3oyt , (1993) = (a2 3a-ens- 3o! to /an', +n-est, and Jo /usiness ;44shore and (a2 Iree> (he D#Era!-3ill .o$panies",+n#" 1221 )-enue o4 the )$eri#as, 6e! Cor'"6"C"10020 .hoi Irederi#' J"&" and Dee' Eary @"(2005) =+nternational )##ountin1> Pearson Adu#ation +n#" Kpper &addle *i-er, 6e! Jersey, 0G45H" Aun .heol &" and *esni#' /ru#e E"(200G), (he D#Era!3ill .o$panies",+n#" 1221 )-enue o4 the )$eri#as, 6e! Cor'"6"C"10020 3ines, Ja$es *" Jr" (2001): .orporate ta2ation, paper prepared as an entry in the +nternational An#y#lopedia o4 the &o#ial and /eha-ioral &#ien#es, )nn )rbor, Di#h": Kni-ersity o4 Di#hi1an, .a$brid1e, Dass": 6ational /ureau o4 A#ono$i# *esear#h" Jones &ally D" (2004), =Prin#iples o4 (a2ation- Ior /usiness and +n-est$ent Plannin1> (he D#Era!- 3ill .o$panies",+n#" 1221 )-enue o4 the )$eri#as, 6e! Cor'"6"C"10020 Jones &ally D" and *hoades-.atana#h &helley .", (2004) =Prin#iples o4 (a2ation-)d-an#e &trate1ies> (he D#Era!3ill .o$panies",+n#" 1221 )-enue o4 the )$eri#as, 6e! Cor'"6"C"10020 Pinto, &antia1o D" (200G): .orporate pro4it ta2, #apital $obility, and 4or$ula apportion$ent, in: Journal o4 Krban A#ono$i#s ?2 (1), G?<102

M2N

M3N

Appendix
A2a$ples o4 trans4er pri#in1 transa#tions: (ransa#tion 1: ;#tober 2004 a P( +nti +ndosa!it &ubur sell 3500"34 $etri# tons o4 .P; to (!in /onus Adible ;il B Iats ,td" (3on1 @on1) 4or K"&" L 3G0 D( or !orth a total o4 K"&" L 1,295,125"H (+n-oi#e 6o"" 1001H + 10 02 04) b Jouble /onus .P; sellin1 it to Elobal )d-an#e (Da#ao) 4or K"&" L 3G2"5 D( -alued at a total o4 K"&" L 1,303,HG?"?5 (+n-oi#e 6o"" 101 052 90H (!in-+)" Eains re#orded K"&" L H,G50"H5" # Elobal )d-an#e (Da#ao) and then sell it to the .P; D & Dani#'a$ Anterprises (+ndia) !ith a pri#e o4 K"&" L 444"5 D( -alued at a total o4 K"&" L 1,555,901"13 (+n-oi#e 6o"" E); 410 1?03210101)" Eains re#orded K"&" L 252,024"4H

M4N

M5N

M?N

MGN

)$eri#an Journal o4 /usiness, A#ono$i#s and Dana1e$ent 2013; 1(1): 25-29

29

MHN

Plass#haert, &yl-ain *"I" (1994):(he $ultiple $oti-ations 4or trans4er pri#in1 $odulations in $ultinational enterprises and 1o-ern$ental- #ounter-$easures: an atte$pt at #lari4i#ation, in: Dana1e$ent +nternational *e-ie! 34 (2), (&pe#ial +ssue), 3?<50

M9N

*ai$ondos-DOller Pas#alis &#har4, @i$berley (2002): (rans4er pri#in1 rules !hen 1o-ern$ents #o$pete, in: ;24ord A#ono$i# Papers 54 (2), 230<24?