Mispricing Argentine Soybean Exports

The main objective of transfer pricing manipulation is tax avoidance. Less recognized is its significant impact on capital flight in developing countries. Transfer pricing manipulation makes possible the transfer of assets abroad as if they were part of normal business activity, sometimes circumvent...

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Bibliographic Details
Published in:Policy File 2016
Main Authors: Grondona, Veronica, Burgos, Martin
Format: Report
Language:English
Subjects:
Agriculture
Norwegian Institute of International Affairs
Online Access:Request full text
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Summary:The main objective of transfer pricing manipulation is tax avoidance. Less recognized is its significant impact on capital flight in developing countries. Transfer pricing manipulation makes possible the transfer of assets abroad as if they were part of normal business activity, sometimes circumventing exchange restrictions. Soybean is a key product for Argentina due to its contribution to foreign exchange and tax income (particularly in relation to export duties). It is also the main export to China, Argentina's second largest commercial partner after Brazil. This policy brief analyses the exports of soybean, soybean oil and soybean meal from Argentina by a group of transnational enterprises. The exports of these three products represented 24% of all of Argentine exports in 2013, 22% in 2012, 24% in 2011, and 25% in 2010. The average mis-invoicing of exports in the soybean sector was close to 10%, amounting to as much as US$1,500 million per year.