eng Science and Education Publishing Journal of Finance and Economics 2328-7276 2014-03-16 2 3 60 66 10.12691/jfe-2-3-1 JFE2014231 article José G. Vargas-Hernández jvargas2006@gmail.com; jgvh0811@yahoo.com; josevargas@cucea.udg. 1 Lic. Belisario Valencia-Sepúlveda, Centro Universitario de Ciencias Económico Administrativas, Universidad de Guadalajara, Zapopan, Jalisco, México The objective of this paper is to analyze the procedures used by multinational enterprises to distribute the income generated by their subsidiaries abroad. Also, the paper intends to answer the question how multinational firms allocate taxes paid on this income among the fiscal jurisdictions in which they operate. In this study, the analytic research method was applied, by revising the available literature in order to determine how income-shifting works, as a fiscal strategy applied by MNEs. It is concluded that MNEs use organizational strategies to take advantage of the comparative advantages of the different countries in which they operate, and, as a result, an intercompany trade takes place. http://pubs.sciepub.com/jfe/2/3/1/jfe-2-3-1.pdf multinational firms transfer pricing income shifts