Publication:
The Effect of Ownership Structure on Transfer Pricing Decisions: Evidence from Foreign Direct Investments in Vietnam
The Effect of Ownership Structure on Transfer Pricing Decisions: Evidence from Foreign Direct Investments in Vietnam
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Date
2021
Authors
Tran Quoc Thinh
Tran Mai Uoc
Lưu Chi Danh
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Research Projects
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Abstract
Transfer pricing is a matter of concern for countries. It affects the interests of the parties involved in the commercial transaction. Through
manipulation of prices in transactions, businesses take advantage of tax rates in a country to adjust profits for economic gain. This affects
the fairness and rationality of economic transactions between related parties. The article uses a two-year time series from 2018 to 2019 of
50 foreign direct investment enterprises in Vietnam. The article uses ordinary least squares to test the hypotheses of the research model.
The article uses four independent variables related to ownership structure affecting transfer pricing decisions including total ownership,
organization ownership, concentration ownership, and area ownership. Research results show that two variables have a positive influence on
transfer pricing decisions including total ownership and organization ownership. Organization ownership has a higher degree of influence
than total ownership. To be able to control transaction activities related to transfer pricing, Vietnam’s state management agencies need to pay
attention to perfecting the legal framework based on supplementing and amending regulations related to transfer pricing. Legal regulations
need to be regulated based on international common practices to ensure uniformity on a global scale.
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Keywords
FDI,
Ownership Structure,
Transfer Pricing Decisions,
Vietnam