Working Paper: NBER ID: w10676
Authors: David F. Bradford
Abstract: This paper considers the treatment of multinational business in the system known as an X Tax. The focus is on the choice between origin and destination treatments of transborder transactions. The destination-principle approach sidesteps the transferpricing problem. It remains in the origin-principle approach, which, however, presents fewer challenges of monitoring imports, obviates the tourism problem' whereby people can reduce their taxes by consuming in a low-tax jurisdiction and avoids transition effects associated with introduction of the tax and subsequent tax rate changes. The paper suggests special rules for transborder transactions between related parties to deal with the transfer-pricing problem.
Keywords: No keywords provided
JEL Codes: H200; H250; H870
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| destination principle approach (F16) | avoids transfer pricing problem (F16) |
| destination principle approach (F16) | reduced administrative burdens (K23) |
| destination principle approach (F16) | enhanced compliance (H26) |
| origin principle (Y20) | manipulation through transfer pricing (F16) |
| origin principle (Y20) | distorted tax revenues (H29) |