|Dischinger, Matthias (August 2008): Profit Shifting by Multinationals and the Ownership Share: Evidence from European Micro Data. Discussion Papers in Economics 2008-17|
This is the latest version of this item.
We provide indirect empirical evidence of profit shifting behavior by multinational enterprises (MNEs) employing a panel study for the years 1995 to 2005, while controlling for unobservable fixed firm effects. We use a large micro database of European MNEs which includes detailed accounting and ownership information. Our results show a strongly negative relationship between an affiliated company's statutory corporate tax rate difference to its foreign parent firm and the affiliate's gross profits. Quantitatively, a 10 percentage points decrease in the tax rate of the affiliate (relative to the parent) increases its pre-tax profitability by 7%, other things being equal. Various robustness checks support this profit shifting inference. Furthermore, we provide evidence that a higher parent's ownership share of its subsidiary leads to intensified shifting activities between these two affiliates.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||corporate taxation, multinational enterprise, profit shifting, share ownership ratio, micro level data|
Economics > Discussion Papers in Economics
Economics > Discussion Papers in Economics > Public Finance
Economics > Chairs > Seminar for Economic Policy
|Subjects:||300 Social sciences > 300 Social sciences, sociology and anthropology|
300 Social sciences > 330 Economics
|JEL Classification:||H25, H26, F23, C33|
|Deposited On:||13. Aug 2008 09:44|
|Last Modified:||15. Apr 2014 10:17|
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Profit Shifting by Multinationals: Indirect Evidence from European Micro Data. (deposited 17. Sep 2007)
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