Global evidence on profit shifting within firms and across time

Fotis Delis, Manthos D. Delis, Luc Laeven and Steven Ongena

Journal of Accounting and Economics, 2025, vol. 79, issue 2

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 the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.

Keywords: Profit shifting; Multinational enterprises; Nonparametric estimation; Tax arbitrage; Global sample (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 H32 M41 (search for similar items in EconPapers)
Date: 2025
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Related works:
Working Paper: Global Evidence on Profit Shifting Within Firms and Across Time (2023)
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:eee:jaecon:v:79:y:2025:i:2:s0165410124000740

DOI: 10.1016/j.jacceco.2024.101744

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