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.

multinational firms, transfer pricing, income shifts