engleski

The significance of APAs for international insourcing

Internalization of business activities and international transfer of capital, as the most attractive form of international cooperation, are the main features of global economy in the recent twenty years. Existing theoretical and empirical research have revealed many characteristically important factors in explaining motives and trends of capital flow. Among them, the most significant impact on this paper was left by the research of The Organization for International Investment (OFII) and PricewaterhouseCoopers LPP (PwC) which indicated that corporate tax rate and transfer pricing rules are the most impactful factors in reaching decisions regarding the directing of business towards US insourcing subsidiaries. Similar results were obtained from the research conducted in particular European countries. However, while defining the factors affecting international insourcing, the existing correlation between Advance Pricing Arrangements (APAs), as a specific form of transfer pricing regulations, and international insourcing has not been studied in any case. Therefore, it could be inferred that the interdependence remains unknown. Consequently, the primary objective of this paper is to explore whether there is a link between APAs and international insourcing. The research was conducted on the sample of chosen EU countries and its results implied that APAs are an important factor in attracting international insourcing.

International insourcing ; Advance pricing arrangements (APAs) ; European Union

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