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Fotis Delis
- 4 July 2025
- WORKING PAPER SERIES - No. 3071Details
- 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 the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.
- JEL Code
- F23 : International Economics→International Factor Movements and International Business→Multinational Firms, International Business
H25 : Public Economics→Taxation, Subsidies, and Revenue→Business Taxes and Subsidies
H26 : Public Economics→Taxation, Subsidies, and Revenue→Tax Evasion
H32 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Firm
M41 : Business Administration and Business Economics, Marketing, Accounting→Accounting and Auditing→Accounting