15 Nw. U. J. Int'l Hum. Rts. 1 (2017)

handle is hein.journals/jihr15 and id is 1 raw text is: 

Monica  lyer


    Transferring Away Human Rights: Using

         Human Rights to Address Corporate

                         Transfer Mispricing


                                   Monica lyer

An  estimated sixty percent of international trade happens within multinational enterprises.
Transfer pricing occurs when one part of a firm sets a price in order to sell to another division in
another country. When  these prices are deliberately set at something other than market rate in
order to minimize the firm 's tax liability, this is known as transfer mispricing, or abusive transfer
pricing. These practices account for an enormous portion of global illicit financial flows. This
paper will consider transfer mispricing as a violation of human rights, and will look at the ways
in which  various human  rights instruments and mechanisms  might be employed  in order to
address this global problem. In doing so, this paper seeks to add to a growing body of literature
that considers the human  rights implications and the importance of incorporating a human
rights approach to issues like tax policy, trade, and corruption, with the aim of addressing the
underlying structural drivers of human rights violations. It also seeks to address a gap in law
and policy discussions that is generally characterized by an uneven power relationship between
stakeholders and lack of voice for those most affected.

                                    I. INTRODUCTION

    In recent years a great deal of global attention has been focused on international taxation
issues, and particularly transfer pricing: the prices that one division or subsidiary of a
transnational corporation (TNC) sets in order to sell to another division or subsidiary in
another country. It is unsurprising that this should have become an area of focus, given that
estimates hold that up to sixty percent of global trade may now happen within TNCs.2 The
reason that transfer pricing is a significant area of concern is its great potential for transfer
mispricing, also known as abusive transfer pricing, which occurs when firms set prices for these
international intrafirm sales at rates other than the market rate, generally in order to take
advantage of tax differences between jurisdictions. For example, in 2008, revenue authorities in
Zambia  investigated a global mining company, Glencore, and found that copper from a mine
primarily owned by a Glencore subsidiary in Zambia was being sold to the Swiss-based parent


1 There has been much discussion of the exact definition of a transnational corporation. This paper will use the terms
TNC, multinational, company, and fir interchangeably to discuss companies or other entities established
in more than one country and so linked that they may coordinate their operations in various ways. Organization for
Economic Cooperation and Development [OECD], OECD Guidelines for Multinational Enterprises, at 17, (2011),
available at http://dx.doi.org/10. 1787/9789264115415-en.
2 Transfer Pricing, Tax Justice Network, http://www.taxjustice.net/topics/corporate-tax/transfer-pricing/ (last visited
Oct. 19, 2015).


Vol. 15: 1 ]

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