Perceived fairness in the taxation of a digital business model

Arbeitspapier

The "fair" taxation of digital business models is challenging. One of the key aspects - both policy makers and the public opinion consider as most pressuring - is the determination of intragroup transfer prices for intangibles used in digital business models. In this paper, we address the issue of a "perceived fair" taxation of the digital economy in the light of the arm's length principle based on a survey with transfer pricing experts. The aim of the survey is not to estimate arm's length profit allocations but rather to elicit fairness considerations in different transfer pricing related scenarios. In a digital economy framework where arm's length profits are distributed extremely inequitably, subjects perceive this distribution of profits as most unfair compared to more balanced scenarios. Consequently, subjects propose a "fair" distribution of profits that substantially differs from the exogenously given arm's length allocation. In scenarios with a more balanced arm's length allocation of profits, we find that the perceived fairness for the expert groups increases while a control group of business students is almost not influenced by the arm's length allocation of profits.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Düsseldorf Working Papers in Applied Management and Economics ; No. 47

Classification and Topics

• Classification: Management ; Micro-Based Behavioral Economics: General‡ ; Multinational Firms; International Business ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Tax Law
• Subject: corporate income tax ; profit-shifting ; arm's length principle ; fairness ; digital economy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Greil, Stefan ; Schwarz, Christian ; Stein, Stefan
• Event: Veröffentlichung
• (who): Hochschule Düsseldorf, Fachbereich Wirtschaftswissenschaften
• (where): Düsseldorf
• (when): 2018

Further information

• DOI: doi:10.20385/2365-3361/2018.47
• Handle: http://hdl.handle.net/10419/204683
• URN: urn:nbn:de:hbz:due62-opus-15759
• Last update: 10.03.2025, 11:44 AM CET