Tax Haven Investors and Corporate Profitability - Evidence of Profit Shifting by German-Based Affiliates of Multinational Firms
| Autor: | Sarah Godar M.A., |
|---|---|
| Typ: | IES Working Papers |
| Rok: | 2018 |
| Číslo: | 36 |
| ISSN / ISBN: | |
| Publikováno v: | IES Working Papers 36/2018 |
| Místo vydání: | Prague |
| Klíčová slova: | |
| JEL kódy: | |
| Citace: | Godar S. (2018): "Tax Haven Investors and Corporate Profitability - Evidence of Profit Shifting by German-Based Affiliates of Multinational Firms". IES Working Papers 36/2018, IES FSV, Charles University. |
| Abstrakt: | This paper uses confidential firm-level panel data to provide new estimates on the extent of corporate profit shifting by German-based affiliates of multinational corporations. The estimated semi-elasticity of reported profits with regard to statutory foreign tax rates is 3.6, or 4.8 when allowing for a non-linear relationship. This is higher than most of the previous estimates of around 1. The case for a non-linear relationship is even stronger when average effective tax rates are used instead of statutory rates. In addition, the paper develops an alternative identification strategy suggesting that the first-time appearance of a tax-haven investor in the ownership chain reduces the reported profits of German-based affiliates by 61 percent if a majority of the affiliate is held by a single investor. The estimated effects are used to extrapolate the amount of shifted profits and associated revenue losses for all German-based foreign affiliates. The results suggest moderate but non-negligible revenue losses between 2.9 and 10.7 percent of corporate income tax revenues (or EUR 1.5-5.6 bn in 2015). |
| Ke stažení: |
wp_2018_36_godar |
