Discussion paper

DP16615 Global Evidence on Profit Shifting Within Firms and Across Time

We provide the first global estimates of profit shifting within firms at the subsidiary-year level. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine the responses by subsidiary-year of earnings to the composite tax indicator faced by all subsidiaries of a multinational firm. Our panel includes 26,593 subsidiaries across 95 countries for the period 2009‒2017. Subsequently, we examine correlates of profit shifting, identifying that a key determinant is the subsidiaries’ ratio of intangible assets, and this channel is stronger in countries with weaker institutions. Both our new database and our novel findings open important avenues to analyze the sources and effects of profit shifting.

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Citation

Delis, F, M Delis, L Laeven and S Ongena (eds) (2022), “DP16615 Global Evidence on Profit Shifting Within Firms and Across Time”, CEPR Press Discussion Paper No. 16615. https://cepr.org/publications/dp16615-1