Multinational entities and transfer pricing disclosures

Globalisation opened new ways for companies to find ways to mitigate and/or avoid tax. Aggressive or abusive transfer pricing methods is one of the main tax avoidance practices engaged by multinational enterprises (“MNEs”). Following the request by G7, the Organisation for Economic Co-operation and...

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Main Author:	Sivabala, Rasarathnam
Format:	Thesis
Language:	eng eng
Published:	2022
Subjects:	HF5601-5689 Accounting
Online Access:	https://etd.uum.edu.my/10751/1/s828490_01.pdf https://etd.uum.edu.my/10751/2/s828490_02.pdf
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id	my-uum-etd.10751
record_format	uketd_dc
spelling	my-uum-etd.107512023-11-26T02:17:23Z Multinational entities and transfer pricing disclosures 2022 Sivabala, Rasarathnam Abdul Malak, Siti Seri Delima Tunku Puteri Intan Safinaz School of Accountancy (TISSA) Tunku Puteri Intan Safinaz School of Accountancy HF5601-5689 Accounting Globalisation opened new ways for companies to find ways to mitigate and/or avoid tax. Aggressive or abusive transfer pricing methods is one of the main tax avoidance practices engaged by multinational enterprises (“MNEs”). Following the request by G7, the Organisation for Economic Co-operation and Development (“OECD”), published Base Erosion and Profit Shifting (“BEPS”) report in 2015 on the fifteen-action plans to tackle aggressive and abusive tax avoidance practices and three of these focussed on transfer pricing matters. Although the International Accounting Standard’s Boards’ Conceptual Framework requires that the financial statements provide useful information for the financial statement readers, the relevant standards do not require MNEs to provide transfer pricing related disclosures. This study observed thirty listed MNEs, comprising of the top fifteen MNEs from Bursa Malaysia and the top fifteen MNEs from London Stock Exchange listings. The study found that most of the sample MNEs included some transfer pricing related disclosures in the annual reports but this was mainly restricted to confirmation that the related party transactions were at arm’s length. The study also found that there was significant difference between the disclosures provided by Malaysian and the UK MNE samples. However, there were no significant differences between the number of MNEs including a transfer pricing disclosure in 2020 compared to 2016. In addition, firm size, the presence of a higher proportion of independent non-executive directors on the board, CEO duality, total number of overseas subsidiaries and proportion of overseas subsidiaries within the group had a positive impact on the transfer pricing disclosure. This study provides insight for IASB & IRB on the current practice by MNEs and whether IASB should consider reviewing their guidance in relation to transfer pricing issues from an accounting perspective. GRI 207 which came into force in January 2021, provides guidance on transfer pricing disclosures for tax transparency reporting. Future studies could expand on this study to observe how the MNEs comply with the new requirement. 2022 Thesis https://etd.uum.edu.my/10751/ https://etd.uum.edu.my/10751/1/s828490_01.pdf text eng 2025-12-12 staffonly https://etd.uum.edu.my/10751/2/s828490_02.pdf text eng public other masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abdul Malak, Siti Seri Delima
topic	HF5601-5689 Accounting
spellingShingle	HF5601-5689 Accounting Sivabala, Rasarathnam Multinational entities and transfer pricing disclosures
description	Globalisation opened new ways for companies to find ways to mitigate and/or avoid tax. Aggressive or abusive transfer pricing methods is one of the main tax avoidance practices engaged by multinational enterprises (“MNEs”). Following the request by G7, the Organisation for Economic Co-operation and Development (“OECD”), published Base Erosion and Profit Shifting (“BEPS”) report in 2015 on the fifteen-action plans to tackle aggressive and abusive tax avoidance practices and three of these focussed on transfer pricing matters. Although the International Accounting Standard’s Boards’ Conceptual Framework requires that the financial statements provide useful information for the financial statement readers, the relevant standards do not require MNEs to provide transfer pricing related disclosures. This study observed thirty listed MNEs, comprising of the top fifteen MNEs from Bursa Malaysia and the top fifteen MNEs from London Stock Exchange listings. The study found that most of the sample MNEs included some transfer pricing related disclosures in the annual reports but this was mainly restricted to confirmation that the related party transactions were at arm’s length. The study also found that there was significant difference between the disclosures provided by Malaysian and the UK MNE samples. However, there were no significant differences between the number of MNEs including a transfer pricing disclosure in 2020 compared to 2016. In addition, firm size, the presence of a higher proportion of independent non-executive directors on the board, CEO duality, total number of overseas subsidiaries and proportion of overseas subsidiaries within the group had a positive impact on the transfer pricing disclosure. This study provides insight for IASB & IRB on the current practice by MNEs and whether IASB should consider reviewing their guidance in relation to transfer pricing issues from an accounting perspective. GRI 207 which came into force in January 2021, provides guidance on transfer pricing disclosures for tax transparency reporting. Future studies could expand on this study to observe how the MNEs comply with the new requirement.
format	Thesis
qualification_name	other
qualification_level	Master's degree
author	Sivabala, Rasarathnam
author_facet	Sivabala, Rasarathnam
author_sort	Sivabala, Rasarathnam
title	Multinational entities and transfer pricing disclosures
title_short	Multinational entities and transfer pricing disclosures
title_full	Multinational entities and transfer pricing disclosures
title_fullStr	Multinational entities and transfer pricing disclosures
title_full_unstemmed	Multinational entities and transfer pricing disclosures
title_sort	multinational entities and transfer pricing disclosures
granting_institution	Universiti Utara Malaysia
granting_department	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
publishDate	2022
url	https://etd.uum.edu.my/10751/1/s828490_01.pdf https://etd.uum.edu.my/10751/2/s828490_02.pdf
_version_	1783729423707537408

Multinational entities and transfer pricing disclosures

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