Profit Shifting of Multinational Corporations Worldwide

Javier Garcia-Bernardo () and Petr Janský
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Javier Garcia-Bernardo: 1Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia; Department of Methodology & Statistics, Utrecht University, the Netherlands; Centre for Complex Systems Studies, Utrecht University, the Netherlands

No 2023/33, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We exploit the new country-by-country reporting data of multinational corporations, with unparalleled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates’ importance for profit shifting and tax reforms.

Keywords: multinational corporation; corporate taxation; profit shifting; effective tax rate; country-by-country reporting; global development (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 H32 (search for similar items in EconPapers)
Pages: 98 pages
Date: 2023-12, Revised 2023-12
New Economics Papers: this item is included in nep-acc, nep-eec, nep-ifn, nep-int, nep-iue, nep-pbe and nep-pub
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https://ies.fsv.cuni.cz/en/profit-shifting-multinational-corporations-worldwide (application/pdf)

Related works:
Journal Article: Profit shifting of multinational corporations worldwide (2024)
Working Paper: Profit Shifting of Multinational Corporations Worldwide (2023)
Working Paper: Profit Shifting of Multinational Corporations Worldwide (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2023_33

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