International Tax Competition and Transfer Pricing: Case Studies from Emerging Economies

Abstract

The globalization of business has led to increased international tax competition, prompting countries to adopt aggressive tax policies to attract foreign direct investment (FDI). This paper explores the interplay between tax competition and transfer pricing in emerging economies, where multinational corporations (MNCs) seek to optimize their tax liabilities. Through case studies of countries like India, Brazil, and South Africa, we investigate the strategies employed by these nations to navigate tax competition and the implications for tax revenue, economic growth, and equity. The findings reveal that while tax competition can stimulate investment, it also poses significant challenges for tax administration and compliance. The paper concludes with recommendations for policymakers to balance the need for investment with the imperative of maintaining a fair and equitable tax system.