Publication detail

Profit Shifting of Multinational Corporations Worldwide

Author(s): doc. Petr Janský Ph.D., Javier Garcia-Bernardo
Type: IES Working Papers
Year: 2021
Number: 14
Published in: IES Working Papers 14/2021
Publishing place: Prague
Keywords: multinational corporation, corporate taxation, profit shifting, effective tax rate, country-by-country reporting, global development
JEL codes: F23, H25, H26, H32
Suggested Citation: Garcia-Bernardo J. and Jansky P. (2021): "Profit Shifting of Multinational Corporations Worldwide" IES Working Papers 14/2021. IES FSV. Charles University.
Abstract: We exploit the new multinational corporations’ country-by-country reporting data with unparalleled country coverage to study profit shifting to tax havens. We show that a logarithmic function is preferable to linear and quadratic ones for modelling the extremely non-linear relationship between profits and tax rates. Using this methodology, we reveal that multinational corporations shifted US$1 trillion of profits in 2016 and that those headquartered in the United States and China did so most aggressively. We establish that the Cayman Islands is the largest tax haven, whereas countries with lower incomes tend to lose more tax revenue relative to total tax revenues.
Downloadable: wp_2021_14_garcia-bernardo, jansky


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