Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/226270 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8568
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
How did the rise of multinational enterprises (MNEs) put pressure on the prevailing international corporate tax framework? MNEs, and firms with market power, are not new phenomena, nor is the corporate income tax, which dates to the early 20th century. This prompts the question, what is distinctly new (about multinational enterprises)—if anything—that has triggered unprecedented recent concerns about vulnerabilities in international tax arrangements and the taxation of MNEs? This paper presents a set of empirical observations and a synthesis of strands of the literature to answer this question. A key message is that MNEs of the 21st century operate differently from prior periods and have evolved to become global firms—with important tax ramifications. The fragility of international tax arrangements was present at the outset of designing international tax rules, but the challenges have drastically intensified with the global integration of business, the increased trade in hard-to-price services and intangibles, and the rapid growth of the digital economy.
Subjects: 
multinational enterprises
global firm
tax avoidance
international tax profit shifting
JEL: 
F14
F23
H25
H26
Document Type: 
Working Paper
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