Profit Shifting, Returns on Foreign Direct Investments and Investment Income Imbalances
Vincent Vicard
IMF Economic Review, 2023, vol. 71, issue 2, No 1, 369-414
Abstract:
Abstract This paper shows that the well documented US excess return on its net foreign assets is no exception at the global level: on average, high corporate tax countries earn larger yields on their foreign direct investment assets than on their liabilities, generating an excess return on their net foreign assets consistent with tax-motivated profit shifting by multinational enterprises. Cross-country evidence based on aggregate data is confirmed using detailed firm-level data for France. A quantification exercise suggests that profit shifting inflated the French FDI income balance by €16 to €32 billion (0.7–1.5% of GDP) in 2015, largely explains the excess return on French FDI assets versus liabilities, and has increased substantially over recent years.
JEL-codes: F23 F3 H25 H26 H32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://link.springer.com/10.1057/s41308-022-00178-4 Abstract (text/html)
Access to full text is restricted to subscribers.
Related works:
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:pal:imfecr:v:71:y:2023:i:2:d:10.1057_s41308-022-00178-4
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2
DOI: 10.1057/s41308-022-00178-4
Access Statistics for this article
More articles in IMF Economic Review from Palgrave Macmillan, International Monetary Fund
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().