During the last two decades, the world has witnessed a massive regional and financial integration. Many countries around the globe have joined number of free trade and capital flight agreements, aiming to smooth trade streaming among them, lifting up many barriers on trade exchange. The movement of capital becomes easy and swift. MNEs can choose freely where to locate their capital investment in order to maximize their after tax profit. Countries' tax policies are taken into consideration by MNEs when making decisions about investment in a certain location. This has stimulated MNEs to search for alternative strategies and led them towards income shifting. Transfer pricing have drawn a great deal of concern among governments and policy makers worldwide. Tax differentials create incentives for MNEs to involve in profit shifting across jurisdictions and minimize their overall income taxation. This study is an attempt to analyze Japanese MNEs' behavior, their reaction towards tax factors and non-tax factors. The book identifies the factors that induce Japanese multinationals' intrafirm trade and their income shifting behavior towards different taxation policies in various countries.
