Global Evidence on Profit Shifting Within Firms and Across Time

Fotis Delis (), Manthos Delis, Luc Laeven and Steven Ongena
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Fotis Delis: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No 2023-12, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre

Abstract: We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009-2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how profits for both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key merit of this approach is that it yields firm-year estimates of profit shifting. We find that multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate owner in tax havens exhibit the largest responses of profits to the tax incentive. Our comprehensive estimates of global profit-shifting volumes exceed those obtained elsewhere in the literature using firm-level data and are in line with estimates obtained using macro-level data. Our new database opens important avenues to analyse the sources and effects of profit shifting.

Date: 2023-12
New Economics Papers: this item is included in nep-eec, nep-ifn, nep-int, nep-pbe and nep-tid
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https://publications.jrc.ec.europa.eu/repository/handle/JRC135964 (application/pdf)

Related works:
Working Paper: Global Evidence on Profit Shifting Within Firms and Across Time (2022)
Working Paper: Global Evidence on Profit Shifting Within Firms and Across Time (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:taxref:202312

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