Profit shifting of multinational corporations worldwide

Javier Garcia-Bernardo and Petr Janský

World Development, 2024, vol. 177, issue C

Abstract: We exploit the new country-by-country reporting data of multinational corporations, with unparallelled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates’ importance for profit shifting and tax reforms.

Keywords: Multinational corporation; Corporate taxation; Profit shifting; Effective tax rate; Country-by-country reporting; Global development (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 H32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Profit Shifting of Multinational Corporations Worldwide (2023)
Working Paper: Profit Shifting of Multinational Corporations Worldwide (2023)
Working Paper: Profit Shifting of Multinational Corporations Worldwide (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:177:y:2024:i:c:s0305750x23003455

DOI: 10.1016/j.worlddev.2023.106527

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