EconPapers    
Economics at your fingertips  
 

PROFIT SHIFTING AND CORRUPTION

Katarzyna Habu () and André Seidel
Additional contact information
Katarzyna Habu: NBER and Oxford University Centre for Business Taxation, Saïd Business School and and Department of Economics, Oxford University

Authors registered in the RePEc Author Service: Katarzyna Anna Bilicka ()

No 5/18, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: This paper introduces heterogeneous profit shifting costs induced by corrupt tax officials to the analysis of profit shifting of multinationals. Using a theoretically derived corruption weighted tax differential, we show that corruption increases profit shifting of European firms. We use our estimates to calculate the implied tax revenue elasticities for European countries and find that countries with otherwise similar tax rates face lower tax revenue elasticities when they are more corrupt. This means that corruption negatively affects the revenue gains that countries could have from increasing their tax rates.

Keywords: corruption; profit shifting; tax revenue elasticities (search for similar items in EconPapers)
JEL-codes: D73 H25 H26 (search for similar items in EconPapers)
Date: 2016-08-19, Revised 2018-05-23
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://ekstern.filer.uib.no/svf/2018/wp%2005-18.pdf Full text (application/pdf)

Related works:
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:hhs:bergec:2018_005

Access Statistics for this paper

More papers in Working Papers in Economics from University of Bergen, Department of Economics Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Kjell Erik Lommerud ().

 
Page updated 2019-07-22
Handle: RePEc:hhs:bergec:2018_005