Global evidence on profit shifting within firms and across time

F. Fotis Delis, M. Delis (), L. Luc Laeven and S. Ongena
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M. Delis: Audencia Business School

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Abstract: We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009–2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.

Keywords: Profit shifting; Multinational enterprises; Nonparametric estimation; Tax arbitrage; Global sample (search for similar items in EconPapers)
Date: 2025-04
Note: View the original document on HAL open archive server: https://hal.science/hal-05133748v1
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Published in Journal of Accounting and Economics, 2025, 79 (2-3), pp.101744. ⟨10.1016/j.jacceco.2024.101744⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05133748

DOI: 10.1016/j.jacceco.2024.101744

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