Centralized vs. de-centralized multinationals and taxes
Nielsen, Søren Bo
- Publisher: Norwegian School of Economics and Business Administration. Department of Economics
Centralized vs. de-centralized decisions; taxes; MNEs | F23 | Transferpreis | taxes | H25 | centralized vs. de-centralized decisions, taxes, MNEs | L23 | centralized vs. de-centralized decisions | Steuer | Multinationales Unternehmen | Organisationsstruktur | MNEs | Theorie
The paper examines how country tax differences affect a multinational enterpriseâ€™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.