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Title: Multinational firms and tax havens

Author(s): Anna Gumpert, James R Hines Jr and Monika Schnitzer

Publication Date: September 2016

Keyword(s): multinational firms and tax havens

Programme Area(s): International Trade and Regional Economics and Public Economics

Abstract: Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently diffcult and costly that only 20.4 percent of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a one percentage point higher foreign tax rate is associated with a 2.3 percent greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives, and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.

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Bibliographic Reference

Gumpert, A, Hines Jr, J and Schnitzer, M. 2016. 'Multinational firms and tax havens'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11495