Applying the turnover filter in transfer pricing Suranjali Tandon and Smarak Swain Electrónico
By: Tandon, Suranjali
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Contributor(s): Swain, Smarak.
Material type: 
ArticlePublisher: 2020Subject(s): GRANDES EMPRESAS | PRECIOS DE TRANSFERENCIA | RENDIMIENTOS
In:
International Transfer Pricing Journal v. 27, n. 5, 2020 Summary: The rejection of comparables on the basis of turnover is a vexed matter, on which there have been conflicting judicial decisions. The fact is that there is scant empirical evidence of any relation between profitability and turnover. Underlying the legal argument is the presumption that market dominance may have a role in determining profitability. This article, one of the first studies of its kind, uses market shares instead to demonstrate the lack of comparability of profit-level indicators of dominant firms and smaller firms. Except for cost-based indicators, we find that for traditional as well as technology-driven sectors, large firms cannot be compared with firms with smaller market shares. The study also finds a cut-off for market share, beyond which profitability is not comparable.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Recursos electrónicos | IEF | IEF | ITPJ/2020/5-2 (Browse shelf) | Available | ITPJ/2020/5-2 |
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Resumen.
The rejection of comparables on the basis of turnover is a vexed matter, on which there have been conflicting judicial decisions. The fact is that there is scant empirical evidence of any relation between profitability and turnover. Underlying the legal argument is the presumption that market dominance may have a role in determining profitability. This article, one of the first studies of its kind, uses market shares instead to demonstrate the lack of comparability of profit-level indicators of dominant firms and smaller firms. Except for cost-based indicators, we find that for traditional as well as technology-driven sectors, large firms cannot be compared with firms with smaller market shares. The study also finds a cut-off for market share, beyond which profitability is not comparable.
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