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arXiv · 2201.08444

Profit Shifting of Multinational Corporations Worldwide

Javier Garcia-Bernardo·Petr Janský
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Abstract

We exploit the new country-by-country reporting data of multinational corporations, with unparalleled 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.

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Javier Garcia-Bernardo, Petr Janský. 2022-01-20. Profit Shifting of Multinational Corporations Worldwide. https://arxiv.org/abs/2201.08444

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