Part 1 - AL-Tax

Chapter 6p. 65). Tanzi and Zee (2000) describe the role of information exchange for taxation in a borderlessworld.11. For example, because of shortcomings in traditional tax auditing of MNCs, the German Ministryof Finance released the ‘electronic audit’ provisions as part of Germany’s landmark 2000 TaxReduction Act. These provisions, having taken effect on 1 January 2002, grant Germany’s taxinspectors access rights to taxpayer computer systems for auditing purposes, indicating a measureto lower transaction costs to access information on the tax case. This adversarial tax behaviorcould be seen as an alternative to APAs, representing a move away from possible governancechoices as in opposition to collaborative governance.12. Erard (2001, pp. 317–335) reports compliance costs of about 2.7% of taxes paid for a weighted fortunein a top 500 Canadian nonfinancial corporations sample in 1995 (average compliance costsC$507,000), and of about 3.2% for a weighted fortune in a top 500 US corporations sample (averagecompliance costs US$2,100,000); Compliance costs increase significantly if foreign affiliated operationsare involved. This estimation does not yet reflect costs of income adjustments on the basis oftransfer pricing audits, which may exceed the actual tax burden and/or any penalties incurred intransfer pricing documentation provisions.13. Interestingly, and to our best knowledge, in contrast to other sovereign state activities such as laborcontracting, running companies, defense, etc., both the internal governance of taxation and the relationbetween tax authorities and taxpayers (external governance) have remained bureaucratic overthe modern age. As a historical overview of US government contracting reveals (Nagle, 1999), taxationhas not been a matter of nonbureaucratic ‘contracting’ over the past two centuries. We welcomeexamples that dispute this fact.ReferencesAllen, D.W. (1991). What are Transaction Costs? Research in Law and Economics, 14:1–18.Bartelsman, E.J. and Beetsma, R.M.W.J. (2000). Why Pay More? Corporate Tax Avoidance ThroughTransfer Pricing in OECD Countries. Journal of Public Economics, 87(9/10): 2225–2228.Brem, M. (2005). Advance Pricing Agreements: Shifts in International Tax Policies. Thesis, FernUniversity, Hagen.Brem, M. and Tucha, T. (2006). Transfer Pricing: Conceptual Thoughts on the Nature of the MultinationalFirm. Vikalpa, 31(2):29–43.Buckley, P.J. and Casson, M.C. (2000). Models of the Multinational Enterprise. In: MultinationalFirms, Cooperation and Competition in the World Economy (Buckley, P.J., ed.), pp. 9–43.Macmillan Press, London.The Economist (2001). Globalisation and Tax. Special Report. The Economist, 29 January.Eden, L. (1998). Taxing Multinationals: Transfer Pricing and Corporate Income Taxation in NorthAmerica. University of Toronto Press, Toronto.Eden, L. and Kurdle, R.T. (2005). Tax Havens: Renegade States in the International Tax Regime? Lawand Policy, 27(1):100–127.Erard, B. (2001). The Income Tax Compliance Burden on Canadian Big Business. In: Tax ComplianceCosts: A Festschrift for Cedric Sandford (Evans, C., Pope, J. and Hasseldine, J., eds), pp. 317–335.Prospect Media, St Leonards, USA.Ernst & Young (2001). Transfer Pricing 2001 Global Surveys (www.ey.com).143