Profit shifting of multinational corporations worldwide

Javier Garcia-Bernardo, Petr Janský*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We exploit the new country-by-country reporting data of multinational corporations, with unparallelled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates’ importance for profit shifting and tax reforms.

Original languageEnglish
Article number106527
Number of pages47
JournalWorld Development
Volume177
Early online date13 Jan 2024
DOIs
Publication statusPublished - May 2024

Bibliographical note

Publisher Copyright:
© 2024 Elsevier Ltd

Keywords

  • Corporate taxation
  • Country-by-country reporting
  • Effective tax rate
  • Global development
  • Multinational corporation
  • Profit shifting

Fingerprint

Dive into the research topics of 'Profit shifting of multinational corporations worldwide'. Together they form a unique fingerprint.

Cite this