Organizational Capacity and Profit Shifting

Katarzyna Bilicka and Daniela Scur

No 29225, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Good organizational capacity drives productivity and potential taxable profits, but may also enable multinationals (MNEs) to more efficiently re-allocate profits across tax jurisdictions, lowering actual taxable profits. We show that MNE subsidiaries with better organizational capacity report significantly lower profits and have a higher incidence of bunching around zero reported profitability in high-tax countries. This pattern is not present in low-tax countries. Further, responsiveness to corporate tax rate changes in terms of profit reporting is driven by firms with good organizational capacity. We show our results are consistent with profit-shifting behavior and rule out key alternative channels.

JEL-codes: H26 H32 M11 M2 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-acc, nep-isf and nep-pbe
Note: PE PR
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Citations: View citations in EconPapers (5)

Published as Katarzyna Bilicka & Daniela Scur, 2024. "Organizational capacity and profit shifting," Journal of Public Economics, vol 238.

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Related works:
Journal Article: Organizational capacity and profit shifting (2024)
Working Paper: Organizational capacity and profit shifting (2022)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational Capacity and Profit Shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
Working Paper: Organizational capacity and profit shifting (2021)
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