Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247391 
Year of Publication: 
2021
Series/Report no.: 
IES Working Paper No. 24/2021
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
Illicit financial flows (IFFs) threaten countries' ability to achieve the Sustainable Development Goals (SDGs). Progressing on the IFFs target is thus crucial, as is the ability to measure achieved progress. In this paper we explore how to best statistically measure tax avoidance by multinational corporations (MNCs) as the SDGs IFFs target. Our main research question is how the best available methods for the statistical measurement of tax avoidance by MNCs reconcile with the Balance of Payments (BoP) statistics. We answer the research question using a combination of approaches, arriving at three main findings. First, we show that the three leading methods for estimating tax avoidance by MNCs are closely related to each other, theoretically as well as empirically. Second, the profit misalignment method applied to the country-by-country reporting (CBCR) data of large MNCs emerges as the most suitable method from a critical review of existing approaches and a range of available statistical data sources. Third, in their current state the BoP statistics are not suitable for estimating tax avoidance by MNCs for many countries due lacking country coverage and missing data. On the basis of our findings, we recommend piloting the use of confidential MNC-level CBCR data to estimate tax avoidance by MNCs as the SDGs IFFs target.
Subjects: 
illicit financial flows
multinational corporations
tax avoidance
balance of payments
country-by-country reporting
Sustainable Development Goals
JEL: 
H25
H26
O23
O24
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.