Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/286362 
Year of Publication: 
2023
Series/Report no.: 
IES Working Paper No. 33/2023
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
We exploit the new country-by-country reporting data of multinational corporations, with unparalleled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $ 850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates' importance for profit shifting and tax reforms.
Subjects: 
multinational corporation
corporate taxation
profit shifting
effective tax rate
country-by-country reporting
global development
JEL: 
F23
H25
H26
H32
Document Type: 
Working Paper

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