Fuzzy Income Allocation of Multinationals: A Fuzzy Logic Concept For Transfer Pricing
Posted: 11 Jan 2006
Date Written: January 2006
The arm's length analysis of international transfer prices of multinational firms lacks a sound methodological approach of the so-called function and risk analysis. In practice, such analyses are of descriptive nature. Derived from Zadeh's mathematical theory of fuzzy sets, this paper investigates a quantitative approach to identify the function and risk pattern of related parties of the multinational group. We illustrate our fuzzy logic approach by means of a simplified example.
JEL Classification: C69, D49, L29, M21
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