Did the Tax Cuts and Jobs Act Reduce Profit Shifting by US Multinational Companies?

Javier Garcia-Bernardo, Gabriel Zucman () and Petr Janský ()
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Javier Garcia-Bernardo: Utrecht University
Gabriel Zucman: UC Berkeley and EU Tax Observatory
Petr Janský: Charles University

No 3, Working Papers from EU Tax Observatory

Abstract: The 2017 Tax Cut and Jobs Act reduced the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms’ profits after the reform. The share of profits booked abroad by US multinationals fell 3–5 percentage points, driven by repatriations of intellectual property to the US. The share of foreign profits booked in tax havens remained stable around 50% between 2015 and 2020. Changes in the global allocation of profits are small overall, but some firms responded strongly.

Keywords: multinational corporation; corporate taxation; profit shifting; effective tax rate; country-by-country reporting; Tax Cuts and Jobs Act (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 H32 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2022-05
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Citations: View citations in EconPapers (1)

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