Fiscal imperialism through intangible asset transfer pricing: A monopsony power critique of the Transactional Net Margin Method

This paper presents a focused critique of the Transactional Net Margin Method (TNMM) within the context of contemporary global value chains (GVCs). It argues that the structural architecture of buyer-driven GVCs is fundamentally characterised by the exercise of monopsony power by lead multinational enterprises (MNEs), a power derived from and enforced through control over critical intangible assets; proprietary brands, intellectual property, platforms, and organisational know-how. Drawing on the concept of monopsony, this analysis demonstrates that these intangibles function primarily as instruments of supplier discipline and coordination, systematically creating bargaining asymmetries that suppress realised profit margins for upstream suppliers. This reality, supported by empirical evidence of widening markup differentials, directly contradicts the foundational assumptions of the OECD’s TNMM.