Profit-Shifting Elasticities, Channels, and the Role of Tax Havens: Evidence from Micro-Level Data

Valeria Merlo and Georg Wamser

No 11045, CESifo Working Paper Series from CESifo

Abstract: This chapter reviews the literature providing empirical estimates on the tax elasticity of multinational profits and discusses the challenges faced when attempting to quantify tax-motivated profit shifting. We first use micro-level data to show that multinational corporations hold a disproportionately large share of profits and financial assets in tax havens, relative to real activities in these countries. We then argue that tax notches associated with anti-tax avoidance legislation may be exploited to better understand tax-motivated profit shifting. This approach suggests a semi-tax elasticity of pre-tax profits of about 0.22, which is substantially smaller than estimates provided in earlier studies.

Keywords: corporate income taxes; profit shifting; tax havens; multinational corporations (search for similar items in EconPapers)
JEL-codes: H25 H26 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-acc, nep-int, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11045

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