Externalities in International Tax Enforcement: Theory and Evidence

Thomas Tørsløv, Ludvig Wier and Gabriel Zucman

American Economic Journal: Economic Policy, 2023, vol. 15, issue 2, 497-525

Abstract: We show that the fiscal authorities of high-tax countries can lack the incentives to combat profit shifting to tax havens. Instead, they have incentives to focus their enforcement efforts on relocating profits booked by multinationals in other high-tax countries, crowding out the enforcement on transactions that shift profits to tax havens, and reducing the global tax payments of multinational companies. The predictions of our model are motivated and supported by the analysis of two new datasets: the universe of transfer price corrections conducted by the Danish tax authority, and new cross-country data on international tax enforcement.

JEL-codes: E62 F23 H25 H26 H87 K34 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20200200 (application/pdf)
https://doi.org/10.3886/E146321V1 (text/html)
https://www.aeaweb.org/doi/10.1257/pol.20200200.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20200200.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Externalities in International Tax Enforcement: Theory and Evidence (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:15:y:2023:i:2:p:497-525

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/pol.20200200

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().