Global Evidence on Profit Shifting Within Firms and Across Time

Fotis Delis, Manthos D. Delis, Luc Laeven and Steven Ongena
Additional contact information
Fotis Delis: European Commission, Joint Research Centre
Manthos D. Delis: Audencia Business School

No 22-94, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We provide the first global estimates of profit shifting at the subsidiary-year level. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine the subsidiary-year responses of earnings to the composite tax indicator faced by all subsidiaries of a multinational firm. Our panel includes 26,593 subsidiaries across 95 countries for the period 2009 2017. We extensively validate our results against aggregate estimates of previous studies and evidence from specific cases. We find that profit shifting decreased over this period in advanced economies but increased in other parts of the world where taxation policies are less stringent on average, consistent with tax arbitrage strategies. We also examine correlates of profit shifting, identifying that a key determinant is the subsidiaries’ ratio of intangible assets, and this channel is stronger in countries with weaker institutions. Both our new database and correlates open important avenues to analyze the sources and effects of profit shifting.

Keywords: Profit shifting; multinational enterprises; nonparametric estimation; intangible assets; institutional quality; global sample (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 H32 M41 (search for similar items in EconPapers)
Pages: 78 pages
Date: 2022-12
New Economics Papers: this item is included in nep-acc, nep-ind, nep-int, nep-pbe and nep-pub
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4291888 (application/pdf)

Related works:
Working Paper: Global Evidence on Profit Shifting Within Firms and Across Time (2023)
Working Paper: Global Evidence on Profit Shifting Within Firms and Across Time (2022)
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:chf:rpseri:rp2294

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().