Research seminar: Katarzyna Bilicka (Utah State University)

 We would like to invite you to a research seminar by Katarzyna Bilicka, a Lars Peter Hansen Associate Professor of Economics and Statistics at Utah State University, Jon M. Huntsman School of Business.

Paper: The Role of Intellectual Property in Tax Planning

Authors: Katarzyna Bilicka (Utah State University), Irem Guceri (Oxford University), Paul Orga (US Department of the Treasury)

Abstract: Multinational enterprises (MNEs) that invest in research and development (R&D) and innovation find it easier to shift profits between their subsidiaries located in jurisdictions with different tax rates. While MNEs invest in R&D and develop intellectual property (IP) across multiple jurisdictions, they can also strategically move profits arising from that IP from high- to low-tax jurisdictions to reduce their overall tax bill. In this paper, we analyze and quantify the importance of two different strategies that MNEs use to move their IP to low-tax jurisdictions: selling a patent developed in a high-tax jurisdiction to a low-tax jurisdiction directly, or signing a cost-sharing arrangement (CSA) between those two jurisdictions to cover the costs of developing further IP. Combining administrative data on CSAs, patent applications and transactions, and US tax returns, we provide novel stylized facts on the use of both those strategies by MNEs. We then show that CSAs increase jurisdiction-level patenting activity, royalty payments, profits, and profitability, especially the CSAs signed with low-tax jurisdictions. At the MNE level, a new CSA significantly increases firm sales, profitability, and R&D investment, without affecting the MNE’s effective tax rates. Private firms are the only ones that experience the significant MNE-level effects on sales, profitability, and intangible assets after they sign their first CSA.

The seminar will take place on Wednesday, May 22, in Room 105 at 14:00.

The paper (not for circulation) is attached. 

If you need a discussion slot with Prof. Bilicka, please write to Petr Janský, and he will try to find a suitable time.

The list of all research seminars at IES (past and forthcoming) is available at: https://ies.fsv.cuni.cz/en/research/research-seminars