STRATEGIC EFFECT OF TRANSFER PRICING ON ECONOMIC DEVELOPMENT

Ogosi, Francis; Umoren, Mary; Inwang, Aniekan; Andem, Francis

Algerian Journal of Management Sciences
Volume 2, Numéro 1, Pages 66-87
2023-07-17

Strategic Effect Of Transfer Pricing On Economic Development

Authors : Ogosi Francis . Umoren Mary . Inwang Aniekan . Andem Francis .

Abstract

This research study is on the strategic effect of transfer pricing on economic development. The objective of the study was to examine some transfer pricing variables and their strategic effects on the economic development in Nigeria. Secondary data sourced from the United Nations and the World Bank databases were utilized in the study using the ex post facto research design. Transfer pricing was proxied by trade misinvoicing and trade openness, economic development was represented by the human development index while regression analysis was employed in the study. The results showed that transfer pricing strategies has significant effect on the economic development in Nigeria. This indicates that trade misinvoicing and trade openness can jointly aid economic development if the illegal practices of tax avoidance can be nipped in the bud by the government, but they cannot remove structural constraints and weaknesses of the economy. It is recommended that the Nigerian government develop a policy of meaningful trade liberalization, encourage an automated flagging system that tests for deviations in the pricing of related and unrelated transactions by businesses and take punitive action against defaulting MNCs and firms.