Transfer pricing applicability: Perceptions of the tax professionals

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Radhi Al-Hamadeen ORCID logo, Taha Almarayeh ORCID logo, Dana Fakhoury, Jowan Rezqallah, Nadeen Zraiqat, Zein Marzouka

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Recently, transfer pricing (TP) regulation was introduced in Jordan for the first time in the country’s history (Income and Sales Tax Department [ISTD], 2021). This research evaluates the overall awareness of tax professionals on TP and its applicability in the early stage of its implementation. This is mainstream accounting research that adopts the quantitative research approach to collect data. In this context, a research questionnaire consisting of 29 items was designed and distributed to TP specialists to investigate four key aspects of TP applicability and impact. The results of the study revealed that the majority of respondents have a good level of understanding of the TP regulation and the concept itself. In terms of the applicability of TP, the results revealed that less experience in how to implement the TP regulation has been gained so far due to insufficient training. It was also indicated that digitalized systems have a significant role in filing TP transactions efficiently. According to the tax professionals’ perceptions, TP has been shown to have a possible influence on lowering the overall tax burden and tackling tax evasion, which leads to increased compliance with the tax law. Statistically, it has been revealed that the perceptions of the tax professionals in Jordan towards the awareness, applicability, and implementation of the TP regulation were not significantly differentiated according to their demographical and professional characteristics. Finally, this research concludes with practical implications and some recommendations for future studies.

Keywords: Transfer Pricing, Intercountry Business, Tax Practitioners, Tax Regulation, Jordan

Authors’ individual contribution: Conceptualization — R.A. and D.F.; Methodology — R.A., T.A., and D.F.; Software — R.A.; Validation — R.A. and T.A.; Formal Analysis — R.A., T.A., D.F., J.R., N.Z., and Z.M.; Investigation — R.A., D.F., J.R., N.Z., and Z.M.; Data Curation — R.A., T.A., and D.F.; Writing — Original Draft — R.A., T.A., D.F., J.R., N.Z., and Z.M.; Writing — Review & Editing — R.A., T.A., and D.F.; Visualization — R.A., T.A., and D.F.; Supervision — R.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: H71, K34, M41, M48, N45

Received: 23.08.2022
Accepted: 20.02.2023
Published online: 22.02.2023

How to cite this paper: Al-Hamadeen, R., Almarayeh, T., Fakhoury, D., Rezqallah, J., Zraiqat, N., & Marzouka, Z. (2023). Transfer pricing applicability: Perceptions of the tax professionals. Corporate Governance and Organizational Behavior Review, 7(1), 166–177.