Multinationals' Sales and Profit Shifting in Tax Havens

Sébastien Laffitte and Farid Toubal

American Economic Journal: Economic Policy, 2022, vol. 14, issue 4, 371-96

Abstract: We show that US multinationals record sales and the profits from these sales in tax havens while their goods and services are physically sold in other countries. We propose a framework illustrating the strategy of sales shifting. Our results reveal the importance of tax havens, which attract a disproportionate fraction of worldwide sales. Our quantification shows a large contribution of sales shifting to multinationals' profit shifting, which amounted to $80 billion in 2013. Our findings suggest that international corporate tax rules based on sales may not address profit shifting efficiently if the policy designs are unable to identify sales by destination.

JEL-codes: F23 H25 H26 H87 L25 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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DOI: 10.1257/pol.20200203

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