SEMINAR SERIES No. 09/1415
Decision Sciences
Ex-Post Transfer Pricing and Global Sourcing Decision in a Multinational Firm
Prof. Vernon N. Hsu
Choh-Ming Li Chair Professor of Decision Sciences and Managerial Economics
CUHK Business School
The Chinese University of Hong Kong
Abstract
Many multinational firms (MNFs) in recent years have put their efforts into developing tax-effective supply chain strategies that integrate tax considerations across different countries and take advantage of specific tax incentives. These strategies oftentimes involve the management of internal transactions taking place between divisions or subsidiaries belonging to the same MNF but located in different countries. Transfer pricing (TP), the pricing for transactions between divisions of an MNF, has been used not just as a tool to facilitate internal transactions; many MNFs also recognize the importance of combining the TP decisions with their tax considerations in improving their overall profitability, e.g., reducing their tax liabilities by shifting some income from high tax countries/regions to low tax ones. In this presentation, we will present a model in which a multinational firm’s production division sells a product to two sales divisions through a TP which is determined ex-post. We show that the MNF’s desire to maximize its global after-tax profits could cause the sales divisions to behave differently from what we expect under the traditional supply chain settings.
Date: November 26, 2014 (Wednesday)
Time: 15:00~16:30
Venue: Faculty of Business Administration, E22-2011
A Short Biography of Prof. Hsu
Prof. Vernon N. Hsu is a Choh-Ming Li Chair Professor of Decision Sciences and Managerial Economics in the CUHK Business School, The Chinese University of Hong Kong. He had also held faculty positions at the University of New South Wales, Australia, George Mason University, USA, and Hong Kong University of Science & Technology. Professor Hsu’s research interests include logistics and supply chain management and the application of optimization theory in Operations Management and Information Systems. Some of his current research projects investigate the integration of international tax planning with global supply chain design. His research has been published in journals such as IIE Transactions, Management Science, Manufacturing and Service Operations Management, Naval Research Logistics, Operations Research and Productions and Operations Management. t.
SEMINAR SERIES No. 09/1415
Decision SciencesEx-Post Transfer Pricing and Global Sourcing Decision in a Multinational Firm
Prof. Vernon N. Hsu
Choh-Ming Li Chair Professor of Decision Sciences and Managerial Economics
CUHK Business School
The Chinese University of Hong Kong
Abstract
Many multinational firms (MNFs) in recent years have put their efforts into developing tax-effective supply chain strategies that integrate tax considerations across different countries and take advantage of specific tax incentives. These strategies oftentimes involve the management of internal transactions taking place between divisions or subsidiaries belonging to the same MNF but located in different countries. Transfer pricing (TP), the pricing for transactions between divisions of an MNF, has been used not just as a tool to facilitate internal transactions; many MNFs also recognize the importance of combining the TP decisions with their tax considerations in improving their overall profitability, e.g., reducing their tax liabilities by shifting some income from high tax countries/regions to low tax ones. In this presentation, we will present a model in which a multinational firm’s production division sells a product to two sales divisions through a TP which is determined ex-post. We show that the MNF’s desire to maximize its global after-tax profits could cause the sales divisions to behave differently from what we expect under the traditional supply chain settings.
Date: November 26, 2014 (Wednesday)
Time: 15:00~16:30
Venue: Faculty of Business Administration, E22-2011
A Short Biography of Prof. Hsu
Prof. Vernon N. Hsu is a Choh-Ming Li Chair Professor of Decision Sciences and Managerial Economics in the CUHK Business School, The Chinese University of Hong Kong. He had also held faculty positions at the University of New South Wales, Australia, George Mason University, USA, and Hong Kong University of Science & Technology. Professor Hsu’s research interests include logistics and supply chain management and the application of optimization theory in Operations Management and Information Systems. Some of his current research projects investigate the integration of international tax planning with global supply chain design. His research has been published in journals such as IIE Transactions, Management Science, Manufacturing and Service Operations Management, Naval Research Logistics, Operations Research and Productions and Operations Management. t.
