The purpose of this research is to determine whether a difference exists in the tax paid, in relation to revenue differentials between domestic oil companies in Saudi Arabia compared to foreign-owned oil companies operating in the country due to transfer pricing policies. The sample of companies to be used are 13 domestic companies and 8 foreign companies. The research conducted by Borvornboonrutai (2001) utilized various linear regression formulas in order to understand the variables that are associated with transfer pricing and the level of taxes paid between domestically-owned companies and foreign companies operating in Thailand. The results of the analyses clearly show that there is a differential in the amount of taxes paid by the oil companies that were investigated in this research based on their origin. The companies that were domestic to Saudi Arabia paid less in taxes, in relation to their revenues, than the companies that were foreign-owned. The actual level of difference in the tax rate was about 4.5% statistical tests confirmed that this rate difference was statistically significant.
Key Words: Corporate tax rates; Income splitting; transfer pricing
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