Are less developed countries more exposed to multinational tax avoidance? Method and evidence from micro-data
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Are less developed countries more exposed to multinational tax avoidance? Method and evidence from micro-data. / Johannesen, Niels; Tørsløv, Thomas Rasmusen; Wier, Ludvig.
Helsinki, Finland : UNU-WIDER, 2016.Research output: Working paper › Research
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TY - UNPB
T1 - Are less developed countries more exposed to multinational tax avoidance?
T2 - Method and evidence from micro-data
AU - Johannesen, Niels
AU - Tørsløv, Thomas Rasmusen
AU - Wier, Ludvig
N1 - JEL classification: H25, H26, H87, O23
PY - 2016
Y1 - 2016
N2 - We use a global dataset with information on 210,000 corporations in 102 countries to investigate whether cross-border profit shifting by multinational firms is more prevalent in less developed countries. We propose a novel technique to study aggressive profit shifting and improve the credibility of existing techniques.Our results consistently show that the sensitivity of reported profits to profit-shifting incentives is negatively related to the level of economic and institutional development. This may explain why many developing countries opt for low corporate tax rates in spite of urgent revenue needs and severe constraints on the use of other tax bases.
AB - We use a global dataset with information on 210,000 corporations in 102 countries to investigate whether cross-border profit shifting by multinational firms is more prevalent in less developed countries. We propose a novel technique to study aggressive profit shifting and improve the credibility of existing techniques.Our results consistently show that the sensitivity of reported profits to profit-shifting incentives is negatively related to the level of economic and institutional development. This may explain why many developing countries opt for low corporate tax rates in spite of urgent revenue needs and severe constraints on the use of other tax bases.
KW - Faculty of Social Sciences
KW - developing countries, international taxation, multinational firms, profit shifting, tax avoidance, tax evasion
KW - H25
KW - H26
KW - H87
KW - O23
M3 - Working paper
SN - 978-92-9256-050-8
T3 - UNU WIDER Working Paper Series
BT - Are less developed countries more exposed to multinational tax avoidance?
PB - UNU-WIDER
CY - Helsinki, Finland
ER -
ID: 160027707