Transfer Pricing as a Tool for International Tax Competition in Emerging Markets

Abstract

Transfer pricing, the pricing of goods, services, and intangible assets between affiliated entities in multinational corporations, plays a significant role in shaping international tax strategies. In emerging markets, transfer pricing is increasingly utilized as a tool for tax competition, where countries modify their tax policies to attract foreign direct investment (FDI). This research paper examines the implications of transfer pricing in the context of international tax competition, focusing on emerging markets. It explores how different countries employ transfer pricing regulations to influence investment decisions, the challenges posed by aggressive tax planning, and the strategies implemented by governments to combat tax avoidance. The paper concludes with recommendations for improving transfer pricing regulations to foster fair tax competition and sustainable economic growth in emerging markets.