• Korean small business review
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• v.31 no.2
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• pp.85-102
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• 2009

With the continued globalization of world markets, transfer pricing has become one of the dominant sources of controversy in international taxation. Transfer pricing is the process by which a multinational corporation calculates a price for goods and services that are transferred to affiliated entities. Consider a Korean electronic enterprise that buys supplies from its own subsidiary located in China. How much the Korean parent company pays its subsidiary will determine how much profit the Chinese unit reports in local taxes. If the parent company pays above normal market prices, it may appear to have a poor profit, even if the group as a whole shows a respectable profit margin. In this way, transfer prices impact the taxable income reported in each country in which the multinational enterprise operates. It's importance lies in that around 60% of international trade involves transactions between two related parts of multinationals, according to the OECD. Multinational enterprises (hereafter MEs) exert much effort into utilizing organizational advantages to make global investments. MEs wish to minimize their tax burden. So MEs spend a fortune on economists and accountants to justify transfer prices that suit their tax needs. On the contrary, local governments are not prepared to cope with MEs' powerful financial instruments. Tax authorities in each country wish to ensure that the tax base of any ME is divided fairly. Thus, both tax authorities and MEs have a vested interest in the way in which a transfer price is determined, and this is why MEs' international transfer prices are at the center of disputes concerned with taxation. Transfer pricing issues and practices are sometimes difficult to control for regulators because the tax administration does not have enough staffs with the knowledge and resources necessary to understand them. The authors examine transfer pricing practices to provide relevant resources useful in designing tax incentives and regulation schemes for policy makers. This study focuses on identifying the relevant business and environmental factors that could influence the international transfer pricing of MEs. In this perspective, we empirically investigate how the management perception of related variables influences their choice of international transfer pricing methods. We believe that this research is particularly useful in the design of tax policy. Because it can concentrate on a few selected factors in consideration of the limited budget of the tax administration with assistance of this research. Data is composed of questionnaire responses from foreign firms in Korea with investment balances exceeding one million dollars in the end of 2004. We mailed questionnaires to 861 managers in charge of the accounting departments of each company, resulting in 121 valid responses. Seventy six percent of the sample firms are classified as small and medium sized enterprises with assets below 100 billion Korean won. Reviewing transfer pricing methods, cost-based transfer pricing is most popular showing that 60 firms have adopted it. The market-based method is used by 31 firms, and 13 firms have reported the resale-pricing method. Regarding the nationalities of foreign investors, the Japanese and the Americans constitute most of the sample. Logistic regressions have been performed for statistical analysis. The dependent variable is binary in that whether the method of international transfer pricing is a market-based method or a cost-based method. This type of binary classification is founded on the belief that the market-based method is evaluated as the relatively objective way of pricing compared with the cost-based methods. Cost-based pricing is assumed to give mangers flexibility in transfer pricing decisions. Therefore, local regulatory agencies are thought to prefer market-based pricing over cost-based pricing. Independent variables are composed of eight factors such as corporate tax rate, tariffs, relations with local tax authorities, tax audit, equity ratios of local investors, volume of internal trade, sales volume, and product life cycle. The first four variables are included in the model because taxation lies in the center of transfer pricing disputes. So identifying the impact of these variables in Korean business environments is much needed. Equity ratio is included to represent the interest of local partners. Volume of internal trade was sometimes employed in previous research to check the pricing behavior of managers, so we have followed these footsteps in this paper. Product life cycle is used as a surrogate of competition in local markets. Control variables are firm size and nationality of foreign investors. Firm size is controlled using dummy variables in that whether or not the specific firm is small and medium sized. This is because some researchers report that big firms show different behaviors compared with small and medium sized firms in transfer pricing. The other control variable is also expressed in dummy variable showing if the entrepreneur is the American or not. That's because some prior studies conclude that the American management style is different in that they limit branch manger's freedom of decision. Reviewing the statistical results, we have found that managers prefer the cost-based method over the market-based method as the importance of corporate taxes and tariffs increase. This result means that managers need flexibility to lessen the tax burden when they feel taxes are important. They also prefer the cost-based method as the product life cycle matures, which means that they support subsidiaries in local market competition using cost-based transfer pricing. On the contrary, as the relationship with local tax authorities becomes more important, managers prefer the market-based method. That is because market-based pricing is a better way to maintain good relations with the tax officials. Other variables like tax audit, volume of internal transactions, sales volume, and local equity ratio have shown only insignificant influence. Additionally, we have replaced two tax variables(corporate taxes and tariffs) with the data showing top marginal tax rate and mean tariff rates of each country, and have performed another regression to find if we could get different results compared with the former one. As a consequence, we have found something different on the part of mean tariffs, that shows only an insignificant influence on the dependent variable. We guess that each company in the sample pays tariffs with a specific rate applied only for one's own company, which could be located far from mean tariff rates. Therefore we have concluded we need a more detailed data that shows the tariffs of each company if we want to check the role of this variable. Considering that the present paper has heavily relied on questionnaires, an effort to build a reliable data base is needed for enhancing the research reliability.

• Korean Journal of Soil Science and Fertilizer
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• v.45 no.2
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• pp.293-300
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• 2012

This study was to investigate the unsuitable rate of the storage facilities, the changes in corrosion process over time after installation according to the status, the time to install the facilities, years elapsed after facilities installation, inspection of methods and motivation, and so on, based on the results of the inspection at the petroleum storage facilities conducted by domestic soil-relate specialized agency to derive optimal management plans which meet the status of soil contamination facilities. The results showed that the facilities more than 5 years after the initial leak test at the time of the installation need to be inspected periodically by considering costs of leak test and remediation of polluted soil. The inspection period can be decided by cost and leak test methods showing discrepancies for the results obtained from individual test whether it was direct or indirect. To compensate these matters, we suggested that the direct inspection method on regular schedule is recommended. On the other hand, the inspection can be voluntarily completed to ease burden of the results by inspection or equivalent level to this inspection method. Also, it may need improved construction supervision and performance test system to minimize the occurrence of the nature defects in installing the facilities as well as the upgrade program for the facilities during intervals of inspection period.

• Applied Biological Chemistry
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• v.22 no.4
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• pp.198-209
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• 1979

L-Tyrosine, 2-chloro-L-tyrosine, 2-bromo-L-tyrosine, and 2-iodo-L-tyrosine were synthesized by ${\beta}-tyrosinase$ obtained from cells of Escherichia intermedia A-21, through the reversal of the ${\alpha},{\beta}-elimination$ reaction, and their molecular structures were analyzed by element analysis, NMR spectroscopy, mass spectrometry and IR spectroscopy. Rates of synthesis and hydrolysis of halogenated tyrosines by ${\beta}-tyrosinase$, inhibition of the enzyme activity by halogenated phenols, and effects of addition of m-bromophenol on the synthesis of 2-bromotyrosine were determined. The results obtained were as follows: 1) In the synthesis of halogenated tyrosines, the yield of 2-chlorotyrosine from m-chlorophenol were approximately 15 per cent, that of 2-bromotyrosine from m-bromophenol 13.8 per cent, and that of 2-iodotyrosine from m-iodophenol 9.8 per cent. 2) Rate of synthesis of halogenated tyrosines by ${\beta}-tyrosinase$ was slower than that of tyrosine and the rates were decreased in the order of chlorine, bromine and iodine, that is, by increasing the atomic radius. Relative rate of 2-chlorotyrosine synthesis was determined to be 28.2, that of 2-bromotyrosine to be 8.13, and that of 2-iodotyrosine to be 0.98, respectively, against 100 of tyrosine. However 3-iodotyrosine was not synthesized by the enzyme. 3) The relative rate of 2-chlorotyrosine hydrolysis by ${\beta}-tyrosinase$ was 70.7, that of 2-bromotyrosine was 39.0, and that of 2-iodotyrosine was 12.6 against 100 of tyrosine, respectively. The rate of hydrolysis appeared to be decreased in the order of chlorine, bromine and iodine, that is, by increasing the atomic radius or by decreasing the electronegativity. But 3-iodotyrosine was not hydrolyzed by the enzyme. 4) The activity of ${\beta}-tyrosinase$ was inhibited by phenol markedly. Of the halogenated phenols, o-, or m-chlorophenol and o-bromophenol gave marked inhibition on the enzyme action, however inhibition by iodophenol was not strong. Plotting by Lineweaver-Burk method, a mixed-type inhibition by m-chlorophenol was observed and its Ki value was found to be $5.46{\times}10^{-4}M$. 5) During the synthesizing reaction of 2-bromotyrosine by the enzyme, sequential addition of substrate which was m-bromophenol with time intervals and in a small amount resulted in better yield of the product. 6) The halogenated tyrosines which were produced by ${\beta}-tyrosinase$ from pyruvate, ammonia and m-halogenated phenols were analysed to determine their molecular structures by element analysis, NMR spectroscopy, mass spectrometry, and IR spectroscopy. The result indicated that they were 2-chloro-L-tyrosine, 2-bromo-L-tyrosine, and 2-iodo-L-tyrosine, respectively.