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TUGAS III AKUNTANSI INTERNASIONAL



Nama Kelompok :
·        Setiawan Angga Ghozali  (26212945)
·        Shella Vida Aprilianty    (26212976)

4EB13

META ANALISIS


Transfer Pricing by Multinational Firms
August, 2006


Background
This journal examines how prices set by multinational firms vary across arm’s-length and related-party customers. It takes advantage of a unique new dataset that tracks the population of U.S. export transactions during the 1990s. Consistent with a model of transfer pricing developed below, these data show that there is a large positive gap between firms’ internal and external prices. The size of this price wedge varies systematically with product differentiation, firms’ market power and destination-countries’ corporate tax rates and import tariffs.
U.S. exports are highly concentrated among a relatively small number of firms. The top 1 percent of exporters represent 0.03 percent of the total number of firms in the United States but account for more than 80 percent of the value of exports and employ more than 11 percent of all private-sector workers. Among large exporters, U.S.-based multinationals, i.e., U.S.-owned multinationals or local affiliates of foreign-owned multinationals, are dominant, controlling more than 90 percent of total U.S. exports. A substantial fraction of these exports — one third — occur within the firm, i.e., between the U.S.-based multinational and a related party in a foreign country. The prominence of multinational firms in international trade has stimulated a large body of research attempting to explain what goods they produce, where they locate production and how they respond to incentives and policies enacted by national and sub-national governments. Their potential use of “transfer” pricing for related-party transactions has, in particular, drawn widespread attention from practitioners as well as academics. Given the large volume of U.S. and global trade that takes place within multinationals, the potential impact of transfer pricing is substantial, having the ability to influence official trade statistics, national accounts aggregates and estimates of inflation and productivity growth via its effect on import and export price indexes.
Multinational firms have both managerial and financial motives for setting different prices for arm’s-length and related-party transactions. Managerial motives include establishing the proper incentives for disparate divisions within a decentralized firm and avoiding “double marginalization” in the presence of market power.5 Financial motivations encompass the minimization of corporate tax and tariff payments as well as the avoidance of foreign exchange controls or other restrictions on cross-border capital movements. Because obtaining direct evidence on the pricing behavior of multinationals is extremely difficult, existing empirical studies generally rely upon indirect evidence or responses in a narrowly defined industry.
The data employed in this paper are derived from point-of-export customs documents tracking every U.S. international export transaction occurring between 1993 and 2000 inclusive. For each export shipment that leaves the United States, these documents record the identity of the exporter, the Harmonized System product classification and date of shipment, the value and quantity shipped, the destination country, the transport mode, and whether the transaction takes place at “arm’s length” or between “related parties”. These data provide researchers the first opportunity to observe key features of multinational-firm activity. Our focus in this paper is on the wedge between multinational firms’ arm’s-length and related-party prices (i.e., unit values) and the extent to which this wedge varies with product and firm characteristics, market structure and government policy.
We find that export prices for intrafirm transactions are significantly lower than prices for the same good sent to an arm’s-length customer. After matching related-party sales by a firm to arm’s-length sales by the same firm for the same product to the same country in the same month using the samemode of transport, we find that the average arm’s-length price is 43 percent higher than the related-party price. Product characteristics are influential in determining this gap. While the wedge for commodities (i.e., undifferentiated goods) averages 8.8 percent, the gap for differentiated goods is 66.7 percent. Firm and market attributes are also influential: the difference between arm’s-length and related-party prices are higher for goods shipped by larger firms, by firms with higher export shares, and by firms in product-country markets served by fewer exporters.
Consistent with incentives to minimize taxation and import duties, we find that the wedge between arm’s-length and related-party prices is negatively associated with destination-country corporate tax rates and positively associated with destination-country import tariffs. For each one percentage point reduction in the foreign tax rate we find an increase in the price wedge of 0.56 to 0.66 percent. A one percentage point increase in the foreign customs duty increases the price wedge by 0.56 to 0.60 percent. These results show that multinational firms make substantial price adjustments to variation in country tax and tariff rates. Back-of-the-envelope calculations suggest that pricing responses to tax rate differences across countries led to $5.5 billion in lower U.S. corporate tax revenues and a $15 billion increase in the merchandise trade deficit in 2004.
We also examine the role of exchange rates in multinational pricing. Though a large literature is devoted to analyzing the interaction of firm market power and exchange rate movements, it largely ignores issues of transfer pricing. Here, we find that the price gap between firms’ arm’slength and related-party prices varies negatively with countries’ real exchange rates, suggesting that multinationals adjust their arm’s-length and related-party prices asymmetrically in response to exchange rate shocks. Coefficient estimates imply that a ten percent appreciation of the dollar against the destination currency reduces the price gap by approximately 2 percent.
The relatively large wedge we find between firms arm’s-length and related-party prices has intriguing implications for how multinational performance should be evaluated. Existing comparison of multinationals with purely domestic firms generally find that they are larger, more innovative, exhibit higher productivity, pay higher wages and employ greater numbers of skilled or educated workers.  Few, if any, of these studies, however, contemplate the influence of transfer pricing, a potentially important omission given that affiliates’ ability to purchase lower-priced intermediate inputs from overseas parents may influence all of these measures of performance. The remainder of the paper proceeds as follows. We start by briefly surveying the large existing literature on transfer pricing. In Section 3, we develop a theoretical framework to highlight the product, firm, and country attributes that potentially influence the gap between firms’ arm’s-length and related-party prices. Section 4 describes the dataset and Section 5 outlines how we compare arm’s-length and related-party prices empirically. We present the main empirical results in Sections 6, 7 and 8. Section 9 concludes.

Purpose
            These data provide researchers the first opportunity to observe key features of multinational-firm activity. Focus in this journal is on the wedge between multinational firms’ arm’s-length and related-party prices (i.e., unit values) and the extent to which this wedge varies with product and firm characteristics, market structure and government policy.

Analysis Tools
Analysis tools used are after-tax profit of the foreign arm's-length firm, Pre-tax profits for the two divisions of the multinational, Taxable income for each division of the multinational, After-tax profit of the two divisions, After-tax profits for the parent firm, After-tax profits for the parent firm.
                                                                                   
Object of Research
The price of the company, the product, the country of destination.

Discussion
Firm Trade Transaction Database (LFTTD) which links individual trade transactions to firms in the United States. This dataset has two components. The first, foreign trade data assembled by the U.S. Census Bureau and the U.S. Customs Bureau, captures all U.S. international trade transactions between 1993 and 2000 inclusive. For each flow of goods across a U.S. border, this dataset records the product classification, the value and quantity shipped, the date of the shipment, the destination (or source) country, the transport mode, and whether the transaction takes place at “arm’s length” or between “related parties”.  “Related-party”, or intrafirm, trade refers to shipments between U.S. companies and their foreign subsidiaries as well as trade between U.S. subsidiaries of foreign companies and their affiliates abroad. For export transactions, firms are “related” if either party owns, directly or indirectly, 10 percent or more of the other party (see Section 30.7(v) of the Foreign Trade Statistics Regulations). This definition of related party corresponds exactly to that used by the Bureau of Economic Analysis in their annual surveys of multinational activity. The second component of the LFTTD is the Longitudinal Business Database (LBD) of the U.S. Census Bureau, which records annual employment and survival information for most U.S. establishments. Employment information for each establishment is collected in March of every year and we aggregate the establishment data up to the level of the firm. Matching the annual information in the LBD to the transaction-level trade data yields the LFTTD. Products in the LFTTD are tracked according to ten-digit Harmonized System (HS) categories, which break exported goods into 8572 products. These products are distributed across two-digit HS “industries”. And also records the share of exports in the industry that are intrafirm and the share of total U.S. exports accounted by the sector.
In this paper we use the LFTTD to focus on the export transactions of U.S.-based firms (as distinct from firms with U.S. nationality). From the raw LFTTD we make two adjustments to create our estimation sample. First we eliminate firms with fewer than 10 transactions during 1993 to 2000 inclusive. Second we eliminate all transactions with missing, imputed or “converted” quantities to ensure that all the observations for a particular product are measured in comparable units and are actually recorded by the transacting firm. Depending on the year, these screens reduce the number of transactions in our sample by 12 to 20 percent relative to the raw data. For the remaining observations, we compute the export price as the unit value of the transaction, i.e., total value per unit quantity.
In order to understand the role of product and country characteristics in shaping relatedparty prices we link several additional datasets to the LFTTD. Two datasets record time-series variation in international corporate tax rates. The first is the World Tax Database (WTD) compiled by the Office of Tax Policy Research at the University of Michigan. From the WTD, we use the maximum statutory corporate tax rate. Reports the maximum corporate tax rate for countries in the database for 2000. Across the 140 countries, the mean (median) tax rate is 30.8 (32) and the rates range from zero in the tax havens of Bermuda and the Bahamas to 54 percent in Iran. One-hundred-twelve countries (80 percent) have tax rates at or below that of the United States. And also reports estimates of countries effective tax rates estimated from Bureau of Economic Analysis (BEA) data, which record foreign revenues as well as the foreign taxes paid by foreign affiliates of U.S. firms. Following the literature, we estimate an effective corporate tax rate for country c in year t by dividing the foreign income taxes paid by total foreign revenue less cost of goods sold and selling and administrative costs.
The ideal rate as suggested by the model is a firm-specific marginal tax rate and, as such, neither measure of country tax rates is entirely satisfactory. Firms, especially multinationals, may receive a variety of tax holidays or exemptions that reduce their own marginal tax rate relative
to the published statutory maximum. The calculated effective rate represents an average, rather than a marginal, rate across firms in a destination country.
Two datasets provide product information: the first is from Rauch (1999) and is used to group products into differentiated and non-differentiated categories. The second is from the UNCTAD TRAINS database and provides tariff rates for six-digit HS (HS6) categories by country for 1993 to 1998.36, reports the average differences in maximum and minimum tariff rates across products within two digit industries. The range of tariffs (highest minus lowest) across countries for the typical product is 64 percent. For example, the tariff rate on handheld computers (HS 847130) ranges from 0 (Canada and others) to 22 percent (Brazil), with a mean and median of 4 percent while the tariff rate on men’s dress shirts (HS 480990) ranges from 0 (Norway) to 80 percent (Mauritius).
Real exchange rates are constructed using monthly data on the end of period (line ae) nominal exchange rate and CPI (line 64) from the IMF International Financial Statistics. Exchange rates are given in log units of foreign currency per U.S. dollar.


Conclusion
            Multinational firms based in the U.S. report large differences in prices for arm’s-length and related-party exports. These differences exist even for the same product produced by the same firm shipped to the same country in the same month by the same mode of transport. Following the development of a simple theoretical framework we find that the price wedge between arm’slength and intrafirm prices responds to differences in market structure, taxes, and tariffs.
Commodity products show much smaller price wedges while those for differentiated products are large, averaging over 67 percent. Similarly, firms with characteristics indicating greater market power, i.e., larger firms and firms with bigger export shares, have larger price differences. Looking across countries, we find the price wedge is larger when the number of exporting firms is smaller.
Much of the interest in transfer pricing centers on the behavior of firms in response to taxes and tariffs. We find significant differences in price wedges for the same product in countries with different tax and tariff rates. Lower corporate taxes and higher tariffs are associated with larger gaps between the arm’s-length and related-party prices.
Our results suggest that transfer pricing may be playing an important role in aggregate national accounting, potentially reducing the reported value of exports and the current account (and thus GDP). The response of the price wedge to tax rates indicates that tax minimization may be an important part of transfer pricing decisions with consequences for the level of corporate tax revenue and strategic responses to changes in the tax code.
This paper also provides some of the first evidence on the effect of exchange rates on pricing decisions inside and outside the firm. The price wedge responds to movements in the real exchange rate: an appreciation of the dollar is associated with a substantial narrowing of the wedge.
This result supports the hypothesis that intrafirm trade plays a role in the determination of aggregate export price indices. More importantly, this suggests that intrafirm trade may play a role in insulating multinationals from exchange rate movements.
Our findings also are important for future research on the role of the multinational corporation in both advanced and developing economies. The sizable gap in prices may be playing an unobserved role in the perceived performance advantage of multinational firms both at home and abroad.


Market Price-Based Transfer Price Systems. Empirical Evidence for Effectiveness and Preconditions
Problems and Perspectives in Management / Volume 5, Issue 2, 2007


Background
Within organisations, market price-based transfer prices are used to internally institutionalise structures that imitate markets. This aims to increase the efficiency of the internal processes through improved coordination and motivation of the corporate departments involved as these departments are increasingly coordinated decentrally as independent units. The design of internal market-price relationships goes far beyond the correct depiction of business processes. Their assessment must also take place from an organisational perspective, which is covered by this paper. As a result tax issues are neglected.
Transfer prices are categorised by their transaction basis into market price-based, negotiated, and cost-based transfer prices. Market prices orientate themselves to the prices of similar products on an external market, negotiated transfer prices are the result of a negotiation process between the internal corporate departments involved in the production process and are therefore also market price-based. In contrast, cost-based transfer prices are derived from the production costs of the intermediate product. In addition to this transaction basis for a transfer price system, the transaction freedom is relevant. The transaction freedom stipulates whether there is an internal compulsion to deliver or purchase by the selling or purchasing department and whether the intermediate product can be supplied from or sold to an external market.
This paper investigates the use of transfer price systems in terms of the basis and freedom of the transaction as well as the implications of this use in terms of the motivation and efficiency effect. To do so, a range of hypotheses was tested using a survey including a questionnaire on specific internal trading transactions in 73 German companies using distribution-free, non-parametric statistical methods. The focus on individual internal trading transactions is an important differentiation characteristic compared with other studies. Section 2 firstly gives a summary of the relevant literature and then derives hypotheses based on this for the use of the transaction basis and freedom in transfer price systems and their effect on motivation and efficiency, whereas these effects will be evaluated from an internal perspective. Section 3 explains the procedure of the study and tests ten hypotheses using distribution-free statistical methods. The discussion and interpretation of the results take place in Section 4; finally Section 5 draws conclusions.

Purpose
The purpose is the to increase efficiency and motivation in internal production,where by market price-based transfer prices imply a particularly positive effect, and  a value measure for the decentralised management of internal production processes.

Hypothesis
This leads us to the first hypothesis:
H 1a: Transfer price systems with a market price-based transaction basis are assessed better than cost-based transfer prices in terms of their motivation effect.

This leads us to the second hypothesis:
H 1b: Transfer price systems with a market price-based transaction basis are assessed better than cost-based transfer prices in terms of their efficiency effect.

Waiving these compulsions therefore promotes motivation:
H 2a: A lack of delivery or purchase compulsion is seen as positive for the motivation effect.

H 2b: A lack of delivery or purchase compulsion is seen as positive for the efficiency effect.
Hypotheses on the use of market price-based transfer price types

Hypotheses H1a and H1b appear initially to imply that the transaction basis should generally be close to the market price. However, this requires the availability of a similar substitute for the intermediate product on an external market and adequate price transparency on this market as only then are appropriately interpretable market prices available as a reference. In this case the market price for the substitute is a suitable value measure for the intermediate product1 and can therefore be used as a measure for the internal transaction. Otherwise cost-based transfer prices must be used as a transaction basis:

H 3a: The use of a market price-based transaction basis is accompanied by better availability of external suppliers.

H 3b: The use of a market price-based transaction basis is accompanied by better transparency of prices on the external intermediate product market.

The use of internal transfer price systems always implies that the departments are on an equal footingthat is similar to a market. Restrictions in this principle may however occur if the two departments have an asymmetric distribution of resources and skills. Such asymmetry may have clear implications for the structure and use of competitive advantages from the perspective of the entire company. A management function that is essential from the perspective of the whole company for the strategically superior department can be opposed appropriately by an asymmetric design of the transaction freedom. The key to this is finally the question as to whether it is advantageous from the perspective of the company as a whole to give the strategically more important department a further-reaching authorisation to access the resources of the other department. ticular advance product according to the purchasing department’s rules, or vice versa the purchasing department fulfils a subordinate sales function whilst the selling department produces a unique product. A department’s clearly superior relative strategic importance should reflect a management role with a corresponding restriction in the interaction with the other department that is similar to a free market – both for delivery and purchasing compulsion and for access to the market (one-sided external purchase or sale):

H 4a: Differences in the relative strategic importance of the departments are accompanied by asymmetric management of the delivery/purchase compulsion.

H 4b: Differences in the relative, strategic importance are accompanied by asymmetric market access (one-sided external purchase or sale).

A market price-based transfer price in particular provides a realistic, external comparison, if the departments are also given freedom to act that is correspondingly similar to the market. If vice versa a delivery compulsion is introduced, the delivering department can no longer act completely in line with the efficiency requirements of the external market that are reflected in the market price. It may then be obliged to produce an uneconomic quantity of the intermediate product. In this case there can be no positive efficiency or motivation effect. Similar implications result for other restrictions in the symmetry of the transaction freedom. If the purchasing department can buy the intermediate product on the external market whilst the supplying department can not sell it on the external market, the purchasing department is in a much better negotiating position and can exploit this in the negotiation process. In addition, negotiations on setting the specific level of the transfer price can only be sufficient if both the price and quantity are freely negotiable.

The selection of the transaction basis and freedom design parameters should therefore be coherent, i.e., be consistent in organisational theory terms. Otherwise a contradiction to the system design could occur:

H 5a: A market price-based transaction basis is accompanied by the lack of delivery and purchase compulsion.

H 5b: A market price-based transaction basis occurs together with free, external sales and purchases.

Analysis Tools
An analytical tool used in this journal is non-parametric statistical methods, and various hypotheses were tested using the survey included a questionnaire on specific internal trade transactions in 73 German companies.
Top of Form
Object of Research
Object of research in this journal is transfer pricing, and internal trade transactions in 73 German companies with the transfer price and the market-based price.

Discussion
Numerous studies on the use of market price-based transfer prices come to the conclusion that around half of the transfer prices used are market price-based in terms of their transaction basis. In a long-term study of 247 US companies, Tang (1993, 25) determined that market prices are used in 37%, negotiated transfer prices in 17% and cost-based transfer prices in 46% of cases. A study by Vancil (1978, 114) reached similar conclusions in a study of 239 US companies (market prices: 31%; negotiated transfer prices: 22%; cost-based transfer prices: 47 %). Another common feature is the statement that market prices are most frequently used as a transaction basis when there is an external market price. In addition, Tang (1993, 25) ascertains as part of a long-term comparison between 1977 and 1990 that the importance of market price-based transfer prices had increased over time. The question as to whether negotiated transfer prices should be viewed as a separate category of transfer prices is assessed differently.
On the basis of his qualitative study, Eccles comes to the conclusion that in particular the corporate strategy, the administrative process when setting the transfer price and the adaptation of the system to the situation must be considered. Eccles’ (1985, 1) design recommendations relate in particular to a consistent relationship to the corporate strategy, especially to vertical integration. Similar recommendations are also found in Larson (1974), Granick (1975), Mostafa et al. (1984) and Kreuter (1999).
Statements on the transaction freedom (compulsion to buy/sell and the opportunity for external purchases and sales) are found more rarely, and the survey of transfer prices used leads to no common scheme. Rook (1971) and Emmanuel (1977, 57), for example, study access to an external market and come to the conclusion that the department supplying the product tends to have greater transaction freedom than the purchasing department, i.e. the intermediate product can more often be sold on the external market than purchased. Finnie (1978) and Lambert (1979) also study subaspects of the transaction freedom without a clear result.
Vancil (1978), Borkowski (1990) and Tang (1993) study interactions between the transfer price system and organisational properties such as size, diversification strategy and level of centralisation. Wu/Sharp (1979) identify general rules depending on the digitally viewed availability of the market price, and Lambert (1979) claims a significantly negative relationship between the conflict level in the corporate departments and the use of the transfer price system.
Overall, it is clear that none of these empirical studies focuses on individual internal trading transactions and that none concentrates on the effects of the transfer price system. There is also no systematic analysis of the transaction basis in terms of all four design parameters, delivery compulsion and opportunity for external sale and purchase.

Conclusion
          Our approach to studying a record of individual internal trade transactions using a standardised questionnaire produced knowledge concerning the effectiveness, use and therefore also the design of transfer price systems that goes beyond existing empirical research. This paper shows on the basis of a study of individual production processes in 73 German companies that market pricebased transfer price systems produce a fundamentally stronger perception of the efficiency and motivation effect than those that are not market price-based. However, their use is connected to conditions regarding the existence of a substitute with a transparent, observable market price and a similar strategic importance of the corporate departments. The transaction basis and transaction freedom tend to be designed to be consistent with each other. The results of the comparative study on the motivation and efficiency effect therefore provide overall support for the demand for transfer price systems to be designed using market prices in terms of their transaction basis and transaction freedom whilst observing the necessary requirements for their appropriate use.
The use of coordination mechanisms that are similar to markets within the company can include the use of an external market for the intermediate product with the corresponding issue of orders to external parties and open-result negotiations on the internal purchase and sale. It has become clear that companies at times want to exclude this aspect in practice. The results of the study speak clearly for critically reviewing an excessively restrictive, non-market price-based approach, especially when it affects the transaction freedom. This applies both if the restrictions are explicitly in place in the form of fixed organisational rules and if these rules have been created over time, which is frequently the case.


On the Necessity of Using Average Cost
as a Base for Transfer Price
European Financial and Accounting Journal, 2008, vol. 3, no. 3, pp. 79-94


Background
Due to the increasing role of multibusiness enterprises (hereinafter “MBE”) and their impact on national welfare, on effectiveness of economic policies and on quality of our lives, we should have interest to clearly and well understand how to deal with transfer pricing issues.  Theory and practice are quite contrary about what shall be optimal transfer price equal to. Our concern will concentrate on the optimal transfer price from the point of view of a MBE, which experiences different income tax rates in countries, where its affiliates have their seats. Former microeconomic literature on transfer prices concludes that optimal transfer price should be equal to marginal cost of production of the supplying business entity (company). This opinion is known since the beginning of the 20th century thanks to (Schmalenbach,1909) and in Anglo-Saxon literature then (Hirshleifer, 1956). Of course,there are limiting conditions, which are explicitly stated to be held while setting the transfer price that way. On the other hand the conclusion reached in the above mentioned articles could be used in reality only under conditions unable to be met in reality. Other topic of interest is optimal level of transfer price in multinational enterprise with different tax levels in different countries. Either elder or new literature on transfer pricing is mostly based on considering the best transfer price on the level of marginal cost.
We could mention many other authors, who argue for market prices or negotiated prices, but their argumentation is based on a solution of some specific problem (information asymmetry, solution of investment allocation distortion, agency cost, etc.). The evident collision of the marginal cost transfer pricing theory can be shown in case of (OECD, 2001). The methods of transfer pricing supported in OECD countries are:
1. arms-length method
2. cost plus method
3. comparable resale price method
4. formula apportionment method
5. profit split method

Which in all cases directly or indirectly use a premise that the fair transfer price is on the level of price achieved at the market transaction, which are marginal cost only in the extraordinary cases (perfectly competitivemarket of the intermediate product). If there is no market for intermediate product, the cost-plus method is used, which does not use marginal cost but the average cost of intermediate product. These can be also the optimal solution, which does not require some necessary conditions used or implied by papers deriving the optimality of marginal cost transfer pricing.

However, already Ronen and McKinney (1970) pointed at this problem and showed, that optimal transfer price can be equal to average cost of intermediate product, but this paper is rarely cited and even more rarely are its conclusions used, we rather find marginal cost pricing. Otherwise the contemporary literature aims rather on the information asymmetry, integration of manager’s and tax objectives or setting of the optimal transfer price with respect to the particular problems of financial management.

Purpose
to determine whether the optimal transfer price must be equal to the marginal cost of supplying companies and designated by the centralized (headquarters MBE) or whether it should be determined through negotiations or even set at the market rate (long sleeve) price.

Analysis Tools
The analysis tool used is the Marginal Cost Transfer Pricing Rule, the average transfer Cost Pricing Rule.

Object of Research
object in this paper is the transfer price

Discussion
Let us suppose that the market for intermediate product is perfectly competitive. Under this condition the only solution for price of intermediate product is marginal cost of production of intermediate product, just because of the nature of the market. In the long run all companies sell their production at the lowest possible price – at the minimum of average cost on perfectly competitive market. This average cost is also marginal cost for that given quantity of intermediate product.
If the market for intermediate product were imperfectly competitive, slightly different situation would occur. On the imperfectly competitive market supplying division (company A) could chose any price within range determined by shape and corners of demand curve (of course with regard to its cost function). Nevertheless, marginal cost could be also suitable as a price of intermediate product in this case. Monopoly profit, achieved on the sales of the intermediate product to external consumers enables supplying company not to use its monopoly power in case ofsales to B and set price for intragroup deliveries on the level of marginal cost. Quite different situation occurs, when market of intermediate product does not exist. In this case there is no external power forcing company A to sell at minimum of average cost and depending upon character of the final product there can or does not have to be space for shifting price of intermediate product.
We have concluded in previous paragraphs that sometimes it is possible to use marginal cost as optimal transfer price in world without taxes (tax differentials), agency cost, etc., but according to our opinion it is particularly due to the fact that external conditions either enable or even force and fix transfer price on such level. We consider marginal cost of intermediate good production not to be good measure for ex ante setting transfer price even in world without taxes and agency cost nor for doing so ex post. The first reason that leads us to this statement is that marginal cost transfer pricing rule distorts resource allocation. The second one is that the above proposed way of transfer pricing would lead to suboptimal decisions in that sense, that it distorts the total cost curve perceived by company selling final product. We will discus both reasons further.
Let us suppose that at the beginning there are one or more non-MBEs. We could assume that profit and cost functions of all firms on the market are the same because of the nature of the perfectly competitive market. Its/their profit functions would be whereas profit function of MBE as an economic entity would be (if we derived transfer price the above shown way) which after some rearrangements could be written in the same way as. In revenues are divided according to the factor (labour, capital) cost and those are fully covered by revenues in the single company including both production of A and B, thus under condition of perfect competition on the market of the final product and on the input factor markets economic profit equals zero.
If the transfer price were set on level of marginal cost of supplying division in the case of MBE, revenues could be divided differently from factor cost. This situation would lead either to shifts and change of shape of production and cost functions or, in case that managers realized that inefficiency to backward shifts in profit, compensating wrong transfer price. Let us assume perfectly competitive market of final product in the absence of market for intermediate product.
All companies operate at the lowest possible average cost on the perfectly competitive market, so that if managers of MBE did not realize the inefficiency, changes in the cost functions would lead to complete loss of competitiveness in long run because of inability to acquire either enough capital or enough labour or to produce at competitive price. If we assumed that managers of MBE arrange backward shifting of profit, we would get to the same state as in equation, except for the problem that shifting of profit could have non-zero cost (thus again in long run MBE would probably lose ability to compete its rivals). Actually we do not impose the assumption that the backward shifting of profit would have non-zero cost, but we just cannot exclude that possibility. Under absence of market for intermediate product and perfectly competitive market of final product we can say that transfer price at a level of marginal cost is unstable and would earlier or later lead to cease of MBE, if we did not impose additional assumptions causing the MBE’s design to have some advantages compared to the single-entity company.
If a market for intermediate good existed, but was not perfectly competitive, the situation would be a bit more complicated, because the optimal level of a transfer price depends among other factors upon characteristics of market of the final product. Transfer price could fall within range of prices, which could also include marginal cost of intermediate good A production, without loss of competitiveness. Would each of those prices be also at level ensuring efficient allocation of resources? We think it would not. Though there is no general solution for this market situation. Even though in this case the best solution for the MBE is that one, which equates marginal cost of production of intermediate good and net marginal revenue of company B, we can see that the best solution is not transfer price at level of marginal cost of intermediate product.

Conclusion
Both older and recent literature on transfer pricing are not unified about the opinion whether the optimal transfer price should be equal to marginal cost of supplying company and set by centralized decision (of a MBE headquarters) or whether it should be set by negotiation or even set on the level of market (arms-length) price. Those, who argue for setting transfer price by negotiation or at the market price levels, base their arguments on market imperfections like information asymmetry, motivation of managers, et cetera. Most of the others replicate Schmalenbach’s (1909) derivation of the marginal cost transfer-pricing rule in spite of evident contradiction to economic reality (e.g. Lutter et al., 1987). We have proved that the optimal transfer price should be equal to average cost of the supplying division plus part (or the whole) of economic profit of the MBE, independent on the market conditions at the market of either intermediate or final product. Such a transfer pricing rule can be set either by a holding company, which rules the supplier and buyer of intermediate product, or can be forced by external conditions (in the market for intermediate product). Our solution is suitable in system, where MBE’s headquarters sets the transfer-pricing formula and either let the divisions to negotiate about optimal quantity or set it by centralized decision. Though our solution was not entirely new, because Ronen and McKinney (1970) came to similar conclusions, lot of recent papers using marginal cost pricing scheme and the state of contemporary economic textbooks call for paper that would explain under generally acceptable assumptions the disadvantages of marginal cost pricing solution. We also offer a design of full costing mechanism (variable costing) that uses advantages of marginal costing and also advantages of full costing by charging separately variable cost (by level of production) and fixed cost (as cost fixed for a given time period).
Several private interviews with CFOs of MBEs have confirmed practical use the above transfer pricing design, but unfortunately the interviewees required absolute confidentiality, so no conclusion could have been drawn on it. At least we should mention the transfer pricing rules by OECD (2001), which are widely applied by tax authorities and use methods, which assume that the transfer price is based on actual average cost of intermediate product.
To avoid overpricing of intermediate product (overspending of supplying division), it would be suitable to use pre-determined (planned) full cost of intermediate product (cp. Miller and Buckman, 1987). Thus this paper allows us to find theoretical concept that would fit and could be extended for examination of transfer pricing policies for taxation (e.g. transfer pricing methods used in OECD, 2001) as well as for managerial purposes.
Although these findings were not solely new, their synthesis as well as generalization of average cost transfer pricing rule were needed as many recent papers still used marginal cost pricing rule without reflecting its unrealistic assumptions. Our results are applicable on MBEs in general, thus also on multinational enterprises as subgroup of MBEs. This paper has been intended as introduction for wider research into optimal taxation with respect to transfer pricing. Therefore the main application of the findings derived in this paper is to support analysis of transfer pricing rules and tax rules design, with respect to international transfer pricing. However further use might be much wider as our conclusions probably would influence design of models of optimal transfer price in presence of taxation, information asymmetry, etc. (which in many cases draw on the marginal cost transfer pricing rule).




Kajian Pengukuran Kinerja Dan
Penetapan Harga Transfer
(Bambang Pamungkas dan Iriyadi, Jurnal Ilmiah Ranggagading
Volume 8 No. 2, Oktober 2008 : 86-94)


Latar Belakang
            Pengertian harga transfer adalah harga jual khusus yang dipakai dalam pertukaran divisi untuk mencatat pendapatan divisi penjualan (selling division) dan biaya divisi pembelian (buying division). Harga transfer mengukur nilai produk (yakni barang atau jasa) yang diserahkan oleh pusat laba kepada pusat pertanggungjawaban lainnya dalam perusahaan. Harga transfer ditetapkan untuk produk-produk antara. Produk-produk antara (intermediate product) adalah barang-barang dan jasa-jasa yang dipasok oleh divisi penjualan kepada divisi pembelian.
            Masalahpenentuan harga transfer dijumpai dalam perusahaan yang organisasinya disusun menurut pusat-pusat laba dan antar pusat laba yang dibentuk tersebut terjadi transfer barang dan jasa. Latar belakang timbulnya harga transfer mempunyai peran ganda, di satu sisi harga transfer mempertegas diversifikasi yang dilakukan oleh manajemen puncak. Harga transfer menetapkan dengan tegas hak masing-masing manajer divisi untuk mendapatkan laba. Dalam penentuan harga transfer, masing-masing divisi yang terlihat merundingkan berbagai unsur yang membentuk harga transfer, karena setiap unsur yang membentuk harga transfer akan berdampak terhadap laba yang dipakai sebagai pengukur kinerja mereka. Di sisi lain, harga transfer berperan sebagai salah satu alat untuk menciptakan mekanisme integrasi. Dalam penentuan sumber pengadaan barang misalnya, manajemen puncak dapat menempuh kebijakan jika menguntungkan perusahaan secara keseluruhan, manajer divisi diwajibkan untuk memilih sumber pengadaan dari divisi lain dalam perusahaan, tidak dari pemasok luar. Dengan kebijakan ini, manajer divisi dipaksa untuk merundingkan harga transfer yang adil bagi semua divisi yang terlibat. Sehingga dua atau lebih divisi yang terpisah perlu melakukan hubungan dalam mencapai tujuan perusahaan bersama, harga transfer mendekatkan dua atau lebih divisi yang semua melakukan bisnis secara independen.
            Dengan ditetapkannya harga transfer ini diharapkan dapat memicu manajemen masing-masing divisi untuk mencapai sasaran laba divisinya dengan cara yang menunjang keberhasilan perusahaan secara keseluruhan tanpa menghilangkan sifat otonomi divisi tersebut pada keseluruhan laba perusahaan dari kontribusi tersebut dapat tercermin prestasi yang diperoleh suatu divisi, sehingga terjadi suatu penyimpangan yang dilakukan suatu divisi mengakibatkan terjadinya kerugian pada divisi tersebut.
            Penetapan harga transfer yang optimal adalah penting mengingat besarnya harga transfer merupakan pendapatan bagi pusat laba penjual dan sebaliknya merupakan biaya bagi pusat laba pembeli. Kesalahan dalam menetapkan harga transfer akan mengakibatkan kesalahan pengukuran kinerja yang berakhir pada kesalahan pengambilan keputusan. PT. X adalah perusahaan yang bergerak dalam bidang industry karoseri (pembuatan badan kendaraan) baik untuk jenis kendaraan niaga maupun kendaraan non niaga. Perusahaan ini terdiri dari 4 divisi, di antaranya: 1. Bagian Komponen dan Perakitan, 2. Bagian Dempul, 3. Bagian Interior, 4. Bagian Finishing.
            Perusahaan di dalam memproduksi barang berdasarkan pada pesanan dimana perusahaan tersebut telah memiliki beberapa pelanggan tetap. Proses produksi pada PT. X secara umum merupakan proses pengolahan bahan baku menjadi barang setengah jadi menjadi barang jadi yang siap untuk dikirim ke pelanggan dan untuk dipasarkan. Penelitian ini dilakukan sebagai satu kasus untuk mengetahui harga transfer antar divisi pada sebuah perusahaan karoseri.

Tujuan
Tujuan dalam jurnal penelitian ini adalah untuk mengetahui metode harga transfer yang digunakan dan membandingkan dengan penggunaan metode harga transfer lainnya.

Alat Analisis
Alat analisis yang digunakan jurnal penelitian ini adalah metode harga transfer berdasarkan biaya dan metode harga transfer berdasarkan harga pasar.

Objek Penelitian
Objek dalam jurnal penelitian ini adalah PT. X merupakan perusahaan yang bergerak dalam bidang industry karoseri (pembuatan badan kendaraan) baik untuk jenis kendaraan niaga maupun kendaraan non niaga.

Pembahasan
Berdasarkan data dalam jurnal penelitian ini, bahwa perusahaan dalam menetapkan harga transfer dengan menggunakan metode biaya penuh maka posisi laba terbesar ada di bagian finishing dan laba terkecil di bagian komponen dan perakitan, sedangkan dengan menggunakan metode harga pasar laba terbesar ada di bagian komponen dan perakitan dan laba terkecil ada di bagian dempul.

Kesimpulan
Dari hasil jurnal penelitian ini, dalam pengukuran kinerja PT. X mempunyai beberapa manajer yang membawahi masing-masing bagian, dimana manajer tersebut mempunyai wewenang dan tanggungjawab di dalam melakukan aktivitas dan menjalankannya. Pengukuran kinerja ini adalah kegiatan yang rutin dalam menilai kinerja-kinerja yang lain.

Apabila penetapan harga transfer dengan menggunakan metode biaya, maka harga perakitan body mobil yang ditransfer dari bagian komponen dan perakitan, bagian dempul dan bagian interior mengalami peningkatan per unit. Laba bagian komponen dan perakitan, bagian dempul, bagian interior dan bagian finishing mengalami peningkatan.

Apabila perusahaan dalam menetapkan harga transfer dengan menggunakan metode biaya penuh laba terbesarnya ada pada bagian finishing, sedangkan dengan menggunakan metode harga pasar laba terbesar ada pada bagian komponen dan perakitan.


ASPEK PERPAJAKAN DALAM PRAKTIK
TRANSFER PRICING
(Fadjar Harimurti, Jurnal Ekonomi dan Kewirausahaan
 Vol. 7, No. 1, April 2007 : 53-61)


Latar Belakang
            Interdependensi antar negara yang diikuti dengan semakin pesatnya hubungan perdagangan dan ekonomi khususnya di bidang permodalan telah menimbulkan suatu perkembangan tatanan baru dalam perekonomian dunia, yaitu munculnya unifikasi ekonomi global dengan kecenderungan ke arah regionalisasi maupun globalisasi. Globalisasi ekonomi telah membawa dampak semakin meningkatnya transaksi internasional atau cross border transaction. Arus barang, orang, jasa, dan permodalan (investasi) antarnegara telah menjadi berlipat ganda. Saat ini pergerakan modal dan dana dari satu negara ke negara lain menjadi lebih besar dari sebelumnya. Lahirnya General Agreement on Trade and Tariff (GATT) dan World Trade Organisation (WTO) telah mengurangi kendala-kendala dalam pergerakan barang, jasa dan modal antar negara. Perusahaan-perusahaan tidak lagi membatasi operasinya hanya di negara sendiri, akan tetapi merambah ke manca negara dan menjadi perusahaan multinasional dan transnasional. Mereka beroperasi melalui anak usaha dan cabang cabangnya di hampir semua negara berkembang dan pasar-pasar yang sedang tumbuh.
Dalam lingkungan perusahaan multinasional, terjadi berbagai transaksi antar anggota yang meliputi penjualan barang dan jasa, lisensi hak dan harta tak berwujud lainnya, penyediaan pinjaman dan sebagainya. Penentuan harga atas berbagai transaksi antar anggota korporasi tersebut dikenal dengan sebutan transfer pricing (harga transfer). Praktik transfer pricing ini dulunya hanya dilakukan oleh perusahaan semata-mata hanya untuk menilai kinerja antar anggota atau divisi perusahaan, tetapi seiring dengan perkembangan zaman praktik transfer pricing sering juga dipakai untuk manajemen pajak yaitu sebuah usaha untuk  meminimalkan jumlah pajak yang harus dibayar.

Tujuan Penelitian
Untuk mentransmisikan data keuangan di antara departemen-departemen atau divisi-diisi perusahaan pada waktu mereka saling menggunakan barang dan jasa satu sama lain, untuk mengevaluasi kinerja divisi dan memotivasi manajer divisi penjual dan divisi pembeli menuju keputusan-keputusan yang serasi dengan tujuan perusahaan secara keseluruhan.   

Alat Analisis
Alat analisis yang digunakan dalam jurnal penelitian ini adalah :
1.      Harga Transfer Dasar Biaya (Cost-Based Transfer Pricing)
2.      Harga Transfer atas Dasar Harga Pasar (Market Basis Transfer Pricing)
3.      Harga Transfer Negosiasi (Negotiated Transfer Prices)

Objek Penelitian
Objek dalam penelitian jurnal tersebut adalah transfer pricing (harga transfer) pada perusahaan multinasional dan menurut hukum positif perpajakan Indonesia.



Pembahasan
Pada Perusahaan Multinasional
Transfer pricing yang dilakukan oleh perusahaan multinasional ini berdasarkan jangkauan geografis operasi perusahaannya tergolong ke dalam transfer pricing transnasional. Transfer pricing transnasional berkenaan dengan transaksi antardivisi dalam satu entitas hukum atau antarentitas legal dalam satu entitas ekonomi yang meliputi berbagai wilayah. sedangkan transfer pricing domestik berhubungan dengan penghitungan harga transfer barang atau jasa antar badan dalam satu grup korporasi besar atau antar divisi dalam satu korporasi dalam satu wilayah (Gunadi, 1999) Memperhatikan deskripsi diatas, kiranya jelas bahwa transfer pricing adalah hal yang lazim digunakan dalam manajemen suatu perusahaan, terutama perusahaan yang memiliki sejumlah pusat pertanggungjawaban yang berbeda, sebagaimana dikatakan oleh Shapiro dalam Gunadi (1994:42) bahwa dari aspek manajemen keuangan, transfer pricing dapat merupakan instrumen perencanaan dan pengendalian mekanisme arus sumber daya entitas ekonomi bagi perusahaan secara keseluruhan. Untuk keperluan perencanaan dan pengendalian manajerial, suatu entitas legal atau entitas ekonomi (beberapa entitas legal yang berada dalam kepemilikan atau penguasaan yang sama) dapat dipecah menjadi beberapa pusat responsibilitas (responsibility center).
            Suatu survey yang dilakukan oleh Ernst & Young LLp, (1999) menemukan
bahwa masalah transfer pricing merupakan masalah utama dalam bidang perpajakan selama kurun waktu dua tahun terakhir yang terjadi pada perusahaanperusahaan multinasional di seluruh dunia. Oleh karena itu banyak kantor akuntan publik melakukan audit compliance, untuk melakukan pemeriksaan atas masalah transfer pricing ini yang memang berpengaruh terhadap jumlah pajak yang harus dibayarkan. Persentase dilakukannya audit compliance pada perusahaan perusahaan multinasional yang tersebar di berbagai negara besar di dunia. Biasanya cegah tangkal yang dilakukan oleh negara-negara dengan adanya transfer pricing adalah membuat suatu kewenangan, dimana pemerintah diberikan wewenang untuk menentukan kembali dengan cara me-realokasikan kembali jumlah laba dan biaya-biaya yang timbul di perusahaan multinasional yang notabene punya beberapa divisi, sehingga laba dan biaya-biaya yang timbul sebagai hasil transaksi antar divisi tersebut yang ditengarai sebagai suatu praktik transfer pricing yang bisa meminimalkan pajak terutang dapat di cegah. U.S.- Based multinationals are subject to Internal Revenue Code Section 482 on the pricing of intercompany transactions. This section gives the IRS the authority to reaalocate income and deductions among divisions if it believes that such reallocation will reduce potentiak tax evasion (Hansen and Mowen, 1996: 543).
Lebih lanjut ditegaskan bahwa dalam IRS, apabila terjadi transaksi antar divisi dalam perusahaan multinasional atau terjadi transaksi dalam perusahaan yang mempunyai hubungan istimewa, maka harga yang berlaku adalah harga yang timbul apabila transaksi tersebut dilakukan dengan pihak-pihak di luar perusahaan atau dengan kata lain, transaksi dilakukan dengan pihak-pihak yang tidak punya hubungan istimewa. Meskipun dari sisi korporasi multinasional transfer pricing merupakan alat untuk memobilisasi laba usaha untuk tujuan usahanya, otoritas fiskal (apparat perpajakan) selalu menginginkan transaksi yang terjadi antardivisi atau antarperusahaan dalam satu grup tetap mengacu pada harga pasar wajar dan bersifat arm’s length.
Negara berkembang, termasuk Indonesia, menyadari bahwa korporasi multinasional dengan berbagai kelebihannya mempergunakan rekayasa transfer pricing untuk mengalihkan potensi pajak Indonesia ke negara lain dengan berbagai dalih, alasan dan justifikasi atas rekayasa tersebut. Oleh karenanya, otoritas fiskal secara subyektif memandang tujuan dilakukannya transfer pricing adalah untuk menghindari pajak, terutama terkait dengan isu mengenai kelayakan alokasi penghasilan, keuntungan dan biaya di antara jurisdiksi pajak yang berbeda-beda dimana korporasi multinasional tersebut beroperasi.

Menurut menurut hukum positif perpajakan Indonesia
Undang-undang perpajakan Indonesia selama sepuluh tahun keberadaannya, belum pernah mencantumkan secara eksplisit istilah transfer pricing maupun penanganannya Perhatian lebih terhadap masalah transfer pricing ini, membuat pemerintah memasukkan klausul masalah penting ini dalam Paket Perubahan Undang-Undang Pajak Tahun 2000. Pasal 18 ayat (3a) UU PPh menyebutkan bahwa: DJP (Dirjen Pajak) berwenang melakukan perjanjian dengan wajib pajak dan bekerja sama dengan pihak otoritas pajak negara lain untuk menentukan harga transaksi antar pihak-pihak yang mempunyai hubungan istimewa, yang berlaku selama suatu periode tertentu dan mengawasi pelaksanaannya serta melakukan renegosiasi setelah periode tertentu tersebut berakhir”.Memori penjelasan pasal tersebut menyatakan bahwa: kesepakatan harga transfer (Advance Pricing Agreement/APA) adalah kesepakatan antara wajib pajak dengan DJP mengenai harga jual wajar produk yang dihasilkannya kepada pihak-pihak yang mempunyai hubungan istimewa (related parties) dengannya. Tujuan diadakannya APA adalah untuk mengurangi terjadinya praktik penyalahgunaan transfer pricing oleh perusahaan multi nasional. Persetujuan antara wajib pajak dengan DJP tersebut dapat mencakup beberapa hal antara lain harga jual produk yang dihasilkan, jumlah royalty, dan lain-lain, tergantung pada kesepakatan. Keuntungan dari APA selain memberikan kepastian hukum dan kemudahan penghitungan pajak, fiskus tidak perlu melakukan koreksi atas harga jual dan keuntungan produk yang dijual wajib pajak kepada perusahaan dalam grup yang sama. APA dapat bersifat unilateral, yaitu merupakan kesepakatan antara DJP dengan wajib pajak atau bilateral, yaitu kesepakatan antara DJP dengan otoritas perpajakan Negara lain yang menyangkut wajib pajak yang berada di wilayah yurisdiksinya”. Berdasarkan hal tersebut, pengaturan lebih jauh mengenai bagaimana wajib pajak mencapai kesepakatan harga transfer dengan DJP melalui APA menjadi hal yang penting mempertimbangkan resiko koreksi fiskal yang dapat dilakukan oleh pihak otoritas pajak berkenaan dengan indikasi ketidakwajaran harga yang diberlakukan kepada pihak-pihak yang mempunyai hubungan istimewa.

Kesimpulan
Transfer pricing didefinisikan sebagai suatu harga jual khusus yang dipakai dalam pertukaran antardivisional untuk mencatat pendapatan divisi penjual (selling division) dan biaya divisi pembeli (buying division). Transfer pricing sering juga disebut dengan intracompany pricing, intercorporate pricing, interdivisional atau internal pricing yang merupakan harga yang diperhitungkan untuk keperluan pengendalian manajemen atas transfer barang dan jasa antar anggota (grup perusahaan). Tujuan transfer pricing adalah untuk mentransmisikan data keuangan di antara departemen-departemen atau divisi-divisi perusahaan pada waktu mereka saling menggunakan barang dan jasa satu sama lain. Praktik transfer pricing sering digunakan oleh banyak perusahaan sebagai alat untuk meminimalkan jumlah pajak yang harus dibayar. Adanya hubungan istimewa merupakan kunci dari dilakukannya praktik transfer pricing dalam bidang perpajakan. Hubungan istimewa dalam perpajakan ditandai dengan adanya hubungan antara dua atau lebih Wajib Pajak yang berada di bawah pemilikan atau penguasaan yang sama baik secara langsung maupun tidak langsung, adanya hubungan antara Wajib Pajak yang mempunyai penyertaan 25% atau lebih pada pihak yang lain. Hubungan istimewa juga ditandai dengan adanya hubungan keluarga baik sedarah dan semenda dalam garis keturunan lurus dan/atau ke samping satu derajat. Kekurang-wajaran dari harga transfer (non arm's length price) yang ditimbulkan dengan adanya praktik transfer pricing dapat terjadi atas: harga penjualan; harga pembelian; alokasi biaya administrasi dan umum (overhead cost); pembebanan bunga atas pemberian pinjaman oleh pemegang saham (shareholder loan); pembayaran komisi, lisensi, franchise, sewa, royalti, imbalan atas jasa manajemen, imbalan atas jasa teknik dan imbalan atas jasa lain; pembelian harta perusahaan oleh pemegang saham (pemilik) atau pihak yang mempunyai hubungan istimewa yang lebih rendah dari harga pasar, penjualan kepada pihak luar negeri melalui pihak ketiga yang kurang/tidak mempunyai substansi usaha.
Beberapa hambatan penerapan APA di Indonesia, seperti: (i) kurangnya sumber daya manusia yang memiliki keahlian khusus di bidang transfer pricing; (ii) sistem pendataan dan dokumentasi yang masih belum memadai dan terorganisir baik; serta (iii) moralitas otoritas fiskal dan wajib pajak yang masih perlu terus menerus diperbaiki, kiranya tidak dipakai untuk dijadikan alasan agar tidak meneruskan pembenahan prosedur teknis pengajuan APA yang telah dijadikan salah satu alternatif pencegahan praktik transfer pricing pada korporasi multinasional dalam UU Pajak kita.

Sumber :
http://faculty.som.yale.edu/peterschott/files/research/papers/tp_52.pdf
http://businessperspectives.org/journals_free/ppm/2007/PPM_EN_2007_02_Wolff.pdf
http://www.vse.cz/polek/download.php?jnl=efaj&pdf=85.pdf
jurnal.stiekesatuan.ac.id/index.php/jir/article/download/44/52
http://download.portalgaruda.org/article.php?article=115084&val=5259