Which multinationals can escape high Statutory Tax Rates? The Profit-Shifting strategy to reduce taxes

Ángela Castillo-Murciego and Julio López-Laborda

Applied Economics Letters, 2024, vol. 31, issue 6, 550-554

Abstract: Multinationals can escape high Statutory Tax Rates (STRs) by way of Profit-Shifting (P-S) and in this form, reduce the Effective Tax Rate (ETR) they ultimately pay. In this article, we find evidence for Spain consistent with P-S, since the relationship between STRs and ETRs becomes negative for multinationals with characteristics that may facilitate P-S, i.e. being very large, having at least one tax haven affiliate, and owning Intellectual Property.

Date: 2024
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DOI: 10.1080/13504851.2022.2140106

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