Private Firms and Offshore Finance

Marcelo Ortiz and Juan Imbet

Working Papers from HAL

Abstract: We study how offshore vehicles (OVs) in tax havens affect domestic investment and taxrevenues among private firms. OVs encourage domestic investment by reducing the tax burdenof OV users. The induced investment can potentially expand the taxable income, creatinga trade-off that may counterbalance the direct tax base erosion traditionally associated withOVs. To test these hypotheses, we build and analyze a large data set of European privatefirms identified as OV users in offshore data leaks. Our findings suggest that OV users investmore and pay more taxes, and that these effects are stronger for standalone firms and for firmsoperating in intangible industries. For identification, we leverage the sequence of offshore dataleaks in a staggered difference-in-difference approach. Our results indicate that OV users reduceinvestments post-leak while their tax payments remain relatively stable.

Keywords: Offshore Vehicles; Offshore Data Leaks; Tax Havens; Corporate Investment; Tax Avoidance (search for similar items in EconPapers)
Date: 2024-01-16
Note: View the original document on HAL open archive server: https://hal.science/hal-04398477v1
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