Transfer Pricing and Global Tax Competition: The Dilemma of Emerging Economies

Abstract

In recent years, issues such as transfer pricing and global tax competition have been vibrant which affect the development of emerging economies in the globalized world. As they expand their business activities across different countries, MNCs are looking for options such as transfer pricing among others to reduce their tax bill, which can sometimes result in Erosion. and the movement of profits (BEPS) to tax havens. Emerging markets are caught in the crossroads of attracting foreign direct investment (FDI) by providing liberal tax policies and at the same time, preserving their tax base. The paper gives an in-depth discussion of the complexities that intercede around transfer pricing, tax justice, and the problem of emerging economies. The solution to the rising problem of tax avoidance includes robust regulations and mechanisms laid down by national and international bodies in a way that is consistent with the principles of transparency and implementability, as well as the widespread use of digital technologies. These initiatives aim to curb tax evasion by multinational corporations, an issue also tackled by the OECD through the coherence of tax pressure and compliance procedures instruction.