Tax Avoidance and Transfer Pricing: Evidence From Greece – Transfer Price Manipulation and Earnings Management

Tax Avoidance and Transfer Pricing: Evidence From Greece – Transfer Price Manipulation and Earnings Management

Nikolaos Eriotis, Spyros Missiakoulis, Ioannis Dokas, Marios Tzavaras, Dimitrios Vasiliou
Copyright: © 2021 |Pages: 12
DOI: 10.4018/IJCFA.2021070103
(Individual Articles)
No Current Special Offers


Globalization has led multinational companies, beyond intensifying their competitiveness, to seek ways to maximize profits through tax avoidance. The international character enables them to transfer profits to tax havens or seek transactions that will enable them to avoid, postpone, or pay lower taxes. Although the previous allegations have been hypothesized by researchers, tax audits, and governments, it is difficult to prove due to the chaotic data and the causal relationship between variables. The present study compared the tax burden of 971 multinationals and 1,160 independent companies for the years 2010-2017 in Greece, using data from the Amadeus Tp-Catalyst database and confirmed previous research on significant differences in terms of profits and tax burdens. To the authors' knowledge, there has not been attempted such an extensive analysis for Greece in the past.
Article Preview

2. Literature Review

The current international research on intra-group transactions is broadly divided into two categories. The first deals mainly with the best possible strategy with respect to the different tax rates, while the second focuses on the reaction of governments to intra-group transactions and their impact on financial growth. Contrary to optimal government policies that are usually analyzed theoretically, business strategies are often confirmed by empirical models. Kant (1990), for example, created a framework according to which a multinational corporation regulates prices on ​​intragroup exports/imports, depending on the tax rate in each region. Later, Schindler and Schjelderup (2014) analyzed the optimal corporate taxation and found that it would be optimal for any government to change corporate investment decisions by reducing tax rates to eliminate the incentive for intra-group transactions. Similarly, Raimondos-Moller and Scharf (2002) have shown that governments use intra-group trading rules strategically to gain a competitive advantage over other countries.

Complete Article List

Search this Journal:
Volume 11: 1 Issue (2024): Forthcoming, Available for Pre-Order
Volume 10: 1 Issue (2023)
Volume 9: 2 Issues (2022): 1 Released, 1 Forthcoming
Volume 8: 2 Issues (2021)
Volume 7: 2 Issues (2020)
Volume 6: 2 Issues (2019)
Volume 5: 2 Issues (2018)
Volume 4: 2 Issues (2017)
Volume 3: 2 Issues (2016)
Volume 2: 2 Issues (2015)
Volume 1: 2 Issues (2014)
View Complete Journal Contents Listing