Working Paper: NBER ID: w30673
Authors: Ludvig S. Wier; Gabriel Zucman
Abstract: This paper constructs time series of global profit shifting covering the 2015–19 period, during which major international efforts were implemented to curb profit shifting. We find that (i) multinational profits grew faster than global profits, (ii) the share of multinational profits booked in tax havens remained constant at around 37 per cent, and (iii) the fraction of global corporate tax revenue lost due to profit shifting rose from 9 to 10 per cent. We extend our time series back to 1975 and document a remarkable increase of multinational profits and global profit shifting from 1975 to 2019.
Keywords: profit shifting; multinational corporations; tax havens; corporate tax revenues
JEL Codes: E25; F23; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| multinational profits (F23) | profit shifting to tax havens (H26) |
| profit shifting to tax havens (H26) | decline in effective corporate tax rates (H26) |
| globalization (F60) | profit shifting dynamics (F23) |
| policy measures (E64) | profit shifting (H26) |
| fraction of multinational profits shifted to tax havens (F64) | corporate tax lost (H26) |