Investigating the shift toward a value- added-type destination-­based­cash­flow­capital­income­tax­(VADCIT)­

VADCIT makes transfer pricing less attractive. If a higher or lower transfer price has no effect on the taxable income in the exporting country or correspondingly in the importing country, then a transfer price organization with the aim of taking advantage of the difference in the tax rates between two countries cannot be executed to any further extent. To confirm this hypothesis, Table 7.1 shows the current tax system and Table 7.2 demonstrates the proposed VADCIT.