Can the Integration of a Tax Compliant Transfer Pricing System Into the Management Control System Be Successful? Yes, It Can!
Journal of Accounting and Organizaional Change, Forthcoming
50 Pages Posted: 3 May 2016 Last revised: 17 Apr 2018
Date Written: April 3, 2018
Abstract
This paper examines how the integration of a single-book tax compliant transfer pricing system into the management control system is related to the perceived success of that transfer pricing system. To identify the relationships, we use results from survey data from Swiss multinational firms with cross-border internal transactions. Whereas analytical research suggests a decoupling of transfer prices to attain both tax compliance and internal (control) purposes, we find that the integration of a tax compliant transfer pricing system into the management control system is perceived to be successful in achieving these goals. This is particularly true when the transfer pricing system is transparent and can be revised in the case of fundamental management control problems. Corroborating these findings, we also find affirmative testimonies from interview data from employees within three multinational enterprises. Overall, our results are consistent with survey-based findings reporting that firms predominantly use the same transfer price for both tax compliance and management control purposes.
Keywords: transfer pricing system integration, enabling use, transfer pricing system success, survey and interview data
Suggested Citation: Suggested Citation