Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78621
Authors: 
Fuest, Clemens
Spengel, Christoph
Finke, Katharina
Heckemeyer, Jost
Nusser, Hannah
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers 13-044
Abstract: 
This paper discusses the issue of profit shifting and 'aggressive' tax planning by multinational firms. The paper makes two contributions. Firstly, we provide some background information to the debate by giving a brief overview over existing empirical studies on profit shifting and by describing arrangements for IP-based profit shifting which are used by the companies currently accused of avoiding taxes. We then show that preventing this type of tax avoidance is, in principle, straightforward. Secondly, we argue that, in the short term, policy makers should focus on extending withholding taxes in an internationally coordinated way. Other measures which are currently being discussed, in particular unilateral measures like limitations on interest and license deduction, fundamental reforms of the international tax system and country-by-country reporting, are either economically harmful or need to be elaborated much further before their introduction can be considered.
Subjects: 
tax avoidance
profit shifting
multinational firms
intellectual property
tax policy
tax reform
JEL: 
H20
H25
F23
K34
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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