Case Topic

Nowadays, many large corporations operate across borders and exploit taxation differences between different countries. Many scholars and regulators claim that some of the most profitable global companies pay too little tax, because these companies can shift profits from high-tax countries to 'tax havens' through arrangements such as transfer pricing. Therefore, it has been proposed that corporations should be taxed on the consolidated group level, instead of the legal entity level. Required Discuss your assessment of the proposal.

Specifically, you are expected to:

1. Illustrate how global companies can shift profits across borders through transfer pricing.

2. Make some recommendation for the Tax Authority how to stop profits shifting from high-tax countries to 'tax havens'.