Organizational capacity and profit shifting

Katarzyna Bilicka and Daniela Scur

POID Working Papers from Centre for Economic Performance, LSE

Abstract: Good organizational capacity drives productivity and potential taxable profits but may also enable multinationals (MNEs) to more efficiently re-allocate profits across tax jurisdictions, lowering actual taxable profits. We show that MNE subsidiaries with better organizational capacity report significantly lower profits and have a higher incidence of bunching around zero reported profitability in high-tax countries. This pattern is not present in low-tax countries. Further, responsiveness to corporate tax rate changes in terms of profit reporting is driven by firms with good organizational capacity. We show our results are consistent with profit-shifting behavior and rule out key alternative channels.

Keywords: Organizational capacity; profit shifting; innovation; diffusion (search for similar items in EconPapers)
Date: 2022-12-06
New Economics Papers: this item is included in nep-acc and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://poid.lse.ac.uk/textonly/publications/downloads/poidwp048.pdf (application/pdf)

Related works:
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational Capacity and Profit Shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational Capacity and Profit Shifting (2021)
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:cep:poidwp:048

Access Statistics for this paper

More papers in POID Working Papers from Centre for Economic Performance, LSE
Bibliographic data for series maintained by ().