Journal of Accounting and Economics Vol. 79 No. 2-3 2025
Global evidence on profit shifting within firms and across time
Abstract
We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009–2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.
- DOI
- 10.1016/j.jacceco.2024.101744
- Volume
- 79
- Issue
- 2-3
- Pages
- 101744
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref