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Multinational firms and tax havens

Anna Gumpert, James Hines () and Monika Schnitzer ()

No 11495, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently diffcult and costly that only 20.4 percent of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a one percentage point higher foreign tax rate is associated with a 2.3 percent greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives, and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.

Keywords: multinational firms; tax havens (search for similar items in EconPapers)
JEL-codes: F23 H87 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-int, nep-pbe, nep-pub, nep-sbm and nep-sog
Date: 2016-09
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