Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146209
Authors: 
Johannesen, Niels
Tørsløv, Thomas
Wier, Ludvig
Year of Publication: 
2016
Series/Report no.: 
WIDER Working Paper 2016/10
Abstract: 
We use a global dataset with information on 210,000 corporations in 102 countries to investigate whether cross-border profit shifting by multinational firms is more prevalent in less developed countries. We propose a novel technique to study aggressive profit shifting and improve the credibility of existing techniques. Our results consistently show that the sensitivity of reported profits to profit-shifting incentives is negatively related to the level of economic and institutional development. This may explain why many developing countries opt for low corporate tax rates in spite of urgent revenue needs and severe constraints on the use of other tax bases.
Subjects: 
developing countries
international taxation
multinational firms
profit shifting
tax avoidance
tax evasion
JEL: 
H25
H26
H87
O23
ISBN: 
978-92-9256-053-9
Document Type: 
Working Paper

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