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Transfer Pricing Practices and the Moderating Role of Country- Level Governance Quality on Corporate Tax Avoidance

Igbalawole Olomiyete (PhD); Kofoworola Rashidat Adegboye

Abstract

MNCs operating in SSA countries have been variously accused of manipulating their Transfer pricing practices, which create the potential for tax avoidance. This study examined how country-level governance indices can moderate/aid the use of this practice. This study adopted the longitudinal research design approach, using the quantitative research method. Three panel models were analysed in the study, which confirmed the use of tax rate difference and low capitalisation tactics by MNCs, though with varying degrees. The study also confirms a partial moderating effect of country-level governance indicators on the relationship between transfer pricing tactics of the MNCs and tax avoidance.

Keywords

Governance qualitymulti-national companiestax avoidancetransfer pricing.

References

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