Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/215049
Authors: 
Langenmayr, Dominika
Liu, Li
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8047
Abstract: 
In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that profits of UK subsidiaries in low-tax countries increased after the reform compared to subsidiaries of non-UK multinationals in the same countries, by an average of 2.1 percentage points. The increase in profit shifting also leads to increases in measured productivity of the foreign affiliates of UK multinationals of between 5 and 9 percent.
Subjects: 
profit shifting
territorial tax system
multinational firms
JEL: 
H25
H87
F23
Document Type: 
Working Paper

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