International Tax Competition in Emerging Economies: The Transfer Pricing Factor

Abstract

International tax competition has emerged as a significant issue in the global economy, particularly affecting emerging economies. This paper explores how transfer pricing practices among multinational corporations (MNCs) influence tax competition in these countries. Through a comprehensive analysis of the mechanisms of transfer pricing, its implications for tax revenues, and regulatory responses, the paper reveals the challenges and opportunities arising from this phenomenon. The findings indicate that while transfer pricing can lead to reduced tax revenues for emerging economies, it also presents opportunities for policy reform and international cooperation. Ultimately, the paper advocates for a balanced approach to tax competition that fosters economic growth while ensuring fair tax practices.