Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175498
Authors: 
Clifford, Sarah
Year of Publication: 
2017
Series/Report no.: 
EPRU Working Paper Series 2017-02
Abstract: 
Using a large panel dataset on worldwide operations of multinational firms, this paper studies one of the most advocated anti-tax-avoidance measures: Controlled Foreign Corporation rules. By including income of foreign low-tax subsidiaries in the domestic tax base, these rules create incentives for multinationals to move income away from low-tax environments. Exploiting variation around the tax threshold used to identify low-tax subsidiaries, we find that multinationals redirect profits into subsidiaries just above the threshold and place more new subsidiaries just above compared to just below the threshold. The resulting increase in global corporate tax revenue partly accrues to the rule-enforcing country.
Subjects: 
CFC legislation
Multinational firms
Tax avoidance
Corporate taxation
JEL: 
F23
H25
K34
Document Type: 
Working Paper

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