Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296134 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11045
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This chapter reviews the literature providing empirical estimates on the tax elasticity of multinational profits and discusses the challenges faced when attempting to quantify tax-motivated profit shifting. We first use micro-level data to show that multinational corporations hold a disproportionately large share of profits and financial assets in tax havens, relative to real activities in these countries. We then argue that tax notches associated with anti-tax avoidance legislation may be exploited to better understand tax-motivated profit shifting. This approach suggests a semi-tax elasticity of pre-tax profits of about 0.22, which is substantially smaller than estimates provided in earlier studies.
Subjects: 
corporate income taxes
profit shifting
tax havens
multinational corporations
JEL: 
H25
H26
Document Type: 
Working Paper
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