The Role of Transfer Pricing in Global Tax Competition: Emerging Markets in Focus

Abstract

In an era of increasing globalization, transfer pricing has emerged as a significant tool for multinational enterprises (MNEs) to manage their tax liabilities across jurisdictions. This paper explores the role of transfer pricing in global tax competition, with a particular focus on emerging markets. It examines how MNEs utilize transfer pricing strategies to exploit tax differentials, the implications for tax revenues in developing countries, and the regulatory responses that have been implemented to mitigate aggressive tax avoidance. Furthermore, it highlights the challenges faced by emerging economies in enforcing transfer pricing regulations and the impact of international tax reforms, such as the Base Erosion and Profit Shifting (BEPS) initiative. Ultimately, the paper argues for a more coordinated global approach to transfer pricing regulation to ensure fair tax practices that contribute to sustainable economic development in emerging markets.