Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299564 
Year of Publication: 
2023
Series/Report no.: 
JRC Working Papers on Taxation and Structural Reforms No. 12/2023
Publisher: 
European Commission, Joint Research Centre (JRC), Seville
Abstract: 
We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009-2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how profits for both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key merit of this approach is that it yields firm-year estimates of profit shifting. We find that multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate owner in tax havens exhibit the largest responses of profits to the tax incentive. Our comprehensive estimates of global profit-shifting volumes exceed those obtained elsewhere in the literature using firm-level data and are in line with estimates obtained using macro-level data. Our new database opens important avenues to analyse the sources and effects of profit shifting.
Creative Commons License: 
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Document Type: 
Working Paper

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