The Tax Sensitivity of Debt in Multinationals: A Review

Guttorm Schjelderup

International Journal of the Economics of Business, 2016, vol. 23, issue 1, 109-121

Abstract: The OECD in its BEPS Action Plan Four addresses tax base erosion by profit shifting through the use of tax deductible interest payments. Their main concern is interest deductions between outbound and inbound investment by groups. Studies of multinational firms show that the tax sensitivity of debt is more modest than one would expect given the incentives for profit shifting. The purpose of this paper is to review existing literature and add to knowledge on multinational firm behavior that pertains to the use of debt.

Date: 2016
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Working Paper: The Tax Sensitivity of Debt in Multinationals: A Review (2015)
Working Paper: The Tax Sensitivity of Debt in Multinationals: A Review (2015)
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DOI: 10.1080/13571516.2015.1115661

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