Abstract
A growing body of economics literature shows that multinational corporations (MNCs) shift their profits to tax havens. We contribute to this evidence by comparing a range of available data sets focusing on US MNCs, including country-by-country reporting data, a full sample of which has been released in December 2019 for the first time. With each of the data sets, we analyse the effective tax rates that US MNCs face in each country and the amount of profits they report. Using country-by-country reporting data, we have been able to establish that lower effective corporate tax rates are associated with higher levels of reported profits when compared with different indicators of real economic activity. This corresponds to the notion that MNCs often shift profits to countries with low effective tax rates—without also shifting substantive economic activity. Consequently, we identify the most important tax havens for US MNCs as countries with both low effective tax rates and high profits misaligned with economic activity.
This is a preview of subscription content, log in via an institution to check access.
source overlaps. Source: Authors. Note: This is an illustrative diagram only. For representation purposes, the distributions shown are less skewed than the empirical distributions
Source: Authors on the basis of various data sets. Notes: IRS data on companies with positives profit (CBCR*), IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Eurostat data and Orbis data on companies with positive profits (Orbis*). The correlation is visualized for the five indicators analysed: a employees, b turnover, c tangible assets, (d) profits, and e taxes accrued
Source: Authors on the basis of various data sets. Notes: a Correlation between IRS data on companies with positives profits (CBCR*), IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Orbis data on companies with positive profits (Orbis*), tax returns data from IRS (Dowd et al.) and statutory corporate income tax (CIT) rates. b ETR by region. The tax rate is unweighted for all but Dowd et al. and CIT, since data on profits and taxes by region is unavailable for those data sets
Source: Authors on the basis of the IRS CBCR, BEA and Orbis data. Notes: a Negative misalignment. b Positive misalignment. The misalignment profits are calculated using the CCCTB formula, where the location of assets, revenue, employees and wages determines the expected location of the profits. The databases used were: IRS data on companies with positive profits (CBCR*), IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Orbis data on companies with positive profits (Orbis*). The location of the accumulated earnings (divided by 10) is marked in brown (CBCR* (acc. Earn.)
Source: Authors on the basis of the IRS CBCR data. Notes: a Relationship between the ETR and profit misalignment (measured as profits in excess of expected profits). Note that countries with the highest positive misalignment tend to have lower ETRs. b Relationship between ETR and the probability of positive misalignment. c Relationship between CIT and the probability of positive misalignment for countries with at least $100 million absolute misalignment. Line indicates the modelled logistic regression and shaded area indicates 95% confidence intervals calculated from 1000 bootstrap samples. Countries in b, c have been slightly moved vertically to improve legibility. The confidence intervals for the coefficient of ETR/CIT are b [− 0.67, − 0.13] and c [− 0.19, − 0.006]
Similar content being viewed by others
Change history
16 March 2021
A Correction to this paper has been published: https://doi.org/10.1007/s10797-021-09662-5
Notes
An illuminating case study is Starbucks, which was selected in 2013 by the European Commission as one of the first state aid cases resulting from an advanced pricing agreement; subsequently, in 2019 the General Court of the European Union’s Court of Justice found that Starbucks’ transfer pricing analysis was reasonable based on Dutch law and OECD Transfer Pricing Guidelines in place at the time of the negotiation of the advanced pricing agreement (Byrnes 2019).
Our dependent variable (misalignment) contains extreme values, both positive and negative. We use the cubic root of the misalignment to ensure that the residuals are approximately normally distributed, while allowing both positive and negative values.
References
Bernard, A. B., Jensen, J. B., & Schott, P. K. (2006). Transfer pricing by U.S.-based multinational firms (working paper no. 12493). National Bureau of Economic Research. https://doi.org/10.3386/w12493
Bilicka, K. A. (2019). Comparing UK tax returns of foreign multinationals to matched domestic firms. American Economic Review, 109(8), 2921–2953. https://doi.org/10.1257/aer.20180496
Blonigen, B. A., Oldenski, L., & Sly, N. (2014). The differential effects of bilateral tax treaties. American Economic Journal: Economic Policy, 6(2), 1–18. https://doi.org/10.1257/pol.6.2.1
Blouin, J., & Robinson, L. A. (2020). Double counting accounting: How much profit of multinational enterprises is really in tax havens? (SSRN Scholarly paper ID 3491451). Social science research network. https://papers.ssrn.com/abstract=3491451. Accessed 28 September 2020.
Bosworth, B., Collins, S. M., & Chodorow-Reich, G. (2007). Returns on FDI: Does the US really do better? Cambridge: National Bureau of Economic Research.
Bouvatier, V., Capelle-Blancard, G., & Delatte, A.-L. (2017). Banks in tax havens: First evidence based on country-by-country reporting. CEPII workking paper. https://ideas.repec.org/p/cpr/ceprdp/12222.html. Accessed 28 September 2020.
Byrnes, W. (2019). Boiling Starbucks’ roasting down to the essence of its residual (SSRN scholarly paper ID 3464990). Social Science Research Network. https://doi.org/10.2139/ssrn.3464990
Clausing, K. A. (2003). Tax-motivated transfer pricing and US intrafirm trade prices. Journal of Public Economics, 87(9–10), 2207–2223. https://doi.org/10.1016/S0047-2727(02)00015-4
Clausing, K. A. (2009). Multinational firm tax avoidance and tax policy. National Tax Journal, 62(4), 703–725.
Clausing, K. A. (2016). The effect of profit shifting on the corporate tax base in the United States and beyond. National Tax Journal, 69(4), 905–934. https://doi.org/10.17310/ntj.2016.4.09
Clausing, K. A. (2020). Profit shifting before and after the tax cuts and jobs act (SSRN scholarly paper ID 3274827). Social Science Research Network. https://papers.ssrn.com/abstract=3274827. Accessed 28 September 2020.
Cobham, A., Faccio, T., & FitzGerald, V. (2019). Global inequalities in taxing rights: An early evaluation of the OECD tax reform proposals.
Cobham, A., & Janský, P. (2018). Global distribution of revenue loss from corporate tax avoidance: Re-estimation and country results. Journal of International Development, 30(2), 206–232. https://doi.org/10.1002/jid.3348
Cobham, A., & Janský, P. (2019). Measuring misalignment: The location of US multinationals’ economic activity versus the location of their profits. Development Policy Review. https://doi.org/10.1111/dpr.12315
Cobham, A., Janský, P., & Meinzer, M. (2018). A half-century of resistance to corporate disclosure. Transnational Corporations, 25(3), 1–26.
Cobham, A., & Loretz, S. (2014). International distribution of the corporate tax base: Implications of different apportionment factors under unitary taxation (ICTD working paper 27, pp. 1–38). International Centre for Tax and Development. ictd.ac/sites/default/files/ICTD%20WP27.pdf
Congressional Budget Office. (2017). International comparisons of corporate income tax rates. https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52419-internationaltaxratecomp.pdf
De Mooij, R., Liu, L., & Prihardini, D. (2019). An assessment of global formula apportionment. IMF Working Paper, 2019(213), 1–41.
De Simone, L., & Olbert, M. (2019). Real effects of private country-by-country disclosure (SSRN scholarly paper ID 3398116). Social Science Research Network. https://papers.ssrn.com/abstract=3398116. Accessed 28 September 2020.
Desai, M. A., Foley, C. F., & Hines, J. R. (2004). A multinational perspective on capital structure choice and internal capital markets. The Journal of Finance, 59(6), 2451–2487.
Devereux, M. P., & Griffith, R. (2003). Evaluating tax policy for location decisions. International Tax and Public Finance, 10(2), 107–126.
Dowd, T., Landefeld, P., & Moore, A. (2017). Profit shifting of U.S. multinationals. Journal of Public Economics, 148, 1–13. https://doi.org/10.1016/j.jpubeco.2017.02.005
Dyreng, S. D., Hanlon, M., Maydew, E. L., & Thornock, J. R. (2017). Changes in corporate effective tax rates over the past 25 years. Journal of Financial Economics, 124(3), 441–463. https://doi.org/10.1016/j.jfineco.2017.04.001
European Commission. (2011). Proposal for a council directive on a common consolidated corporate tax base (CCCTB). https://ec.europa.eu/taxation_customs/business/company-tax/common-consolidated-corporate-tax-base-ccctb_en. Accessed 28 September 2020.
European Commission. (2016). Proposal for a council directive on a common consolidated corporate tax base (CCCTB). https://ec.europa.eu/taxation_customs/business/company-tax/common-consolidated-corporate-tax-base-ccctb_en
European Commission. (2018). Taxation trends in the European Union. https://ec.europa.eu/taxation_customs/business/economic-analysis-taxation/taxation-trends-eu-union_en. Accessed 28 September 2020.
Flaaen, A. (2017). The role of transfer prices in profit-shifting by US multinational firms: Evidence from the 2004 homeland investment act. FEDS working paper, 2017(55), 1–40.
Garcia-Bernardo, J., Fichtner, J., Takes, F. W., & Heemskerk, E. M. (2017). Uncovering offshore financial centers: Conduits and sinks in the global corporate ownership network. Scientific Reports, 7(1), 6246. https://doi.org/10.1038/s41598-017-06322-9
Garcia-Bernardo, J., Janský, P., & Tørsløv, T. (2019a). Multinational Corporations and Tax Havens: Evidence from Country by Country Reporting. IES Working Paper Series, 2019(31), 1–34.
Garcia-Bernardo, J., Janský, P., & Tørsløv, T. (2019b). Decomposing multinational corporations’ declining effective tax rates. IES Working Paper Series, 2009(39), 1–32.
Garcia-Bernardo, J., Janský, P., & Tørsløv, T. (2020). Multinational Corporations’ Effective Tax Rates: Evidence from Orbis. IES Working Paper Series, 2020(20), 1–36.
Government Accountability Office. (2008). U.S. multinational corporations effective tax rates are correlated with where income is reported. https://www.gao.gov/assets/280/279648.pdf
Graham, J. R., Raedy, J. S., & Shackelford, D. A. (2012). Research in accounting for income taxes. Journal of Accounting and Economics, 53(1), 412–434.
Grubert, H. (2012). Foreign taxes and the growing share of US multinational company income abroad: Profits, not sales, are being globalized. National Tax Journal, 65(2), 247–282.
Grubert, H., & Mutti, J. (2000). Do taxes influence where US corporations invest? National Tax Journal, 53(4), 825–840. https://doi.org/10.17310/ntj.2000.4.02
Guvenen, F., Mataloni, R. J., Jr., Rassier, D. G., & Ruhl, K. J. (2017). Offshore profit shifting and domestic productivity measurement. Cambridge: National Bureau of Economic Research.
Hanappi, T. (2018). Corporate effective tax rates. https://doi.org/10.1787/a07f9958-en
Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2), 127–178. https://doi.org/10.1016/j.jacceco.2010.09.002
Hanlon, M., & Maydew, E. L. (2009). Book-tax conformity: Implications for multinational firms. National Tax Journal, 127–153.
Hanlon, M., Maydew, E. L., & Shevlin, T. (2008). An unintended consequence of book-tax conformity: A loss of earnings informativeness. Journal of Accounting and Economics, 46(2–3), 294–311.
Hines, J. R. (2010). Treasure Islands. Journal of Economic Perspectives, 24(4), 103.
Hines, J. R., & Rice, E. M. (1994). Fiscal paradise: Foreign tax havens and American business. Quarterly Journal of Economics, 109(1), 149–182. https://doi.org/10.2307/2118431
Huesecken, B., & Overesch, M. (2015). Tax Avoidance through advance tax rulings—Evidence from the LuxLeaks firms (SSRN scholarly paper ID 2664631). Social Science Research Network. https://papers.ssrn.com/abstract=2664631. Accessed 28 September 2020.
ICIJ. (2014). Luxembourg leaks: Global companies’ secrets exposed. International Consortium of Investigative Journalists. https://www.icij.org/project/luxembourg-leaks. Accessed 28 September 2020.
ICIJ. (2017). Paradise papers. https://www.Icij.org/Investigations/paradise-papers/. Accessed 28 September 2020.
IRS. (2019a). About form 8975|Internal revenue Service. About Form 8975, Country by Country Report. https://www.irs.gov/forms-pubs/about-form-8975
IRS. (2019b). SOI tax stats—Controlled foreign corporations. Internal Revenue Service.
IRS. (2020). Tax year 2017 country by country tables. Internal Revenue Service.
Janský, P. (2020a). European banks and tax havens: evidence from country-by-country reporting. Applied Economics, 52(54), 5967–5985. https://doi.org/10.1080/00036846.2020.1781773
Janský, P. (2019). Effective tax rates for multination entreprises in the EU (pp. 1–41) [Policy paper for Greens/EFA group in the European Parliament.].
Janský, P. (2020b). The costs of tax havens: evidence from industry-level data. Applied Economics, 52(29), 3204–3218. https://doi.org/10.1080/00036846.2019.1707765
Janský, P. (2020c). Corporate Effective Tax Rates for Research and Policy. IES Working Paper Series, 2020(41), 1–24.
Janský, P., & Palanský, M. (2019). Estimating the scale of profit shifting and tax revenue losses related to foreign direct investment. International Tax and Public Finance, 26(5), 1048–1103. https://doi.org/10.1007/s10797-019-09547-8
Johannesen, N., Tørsløv, T., & Wier, L. (2020). Are less developed countries more exposed to multinational tax avoidance? Method and evidence from micro-data. The World Bank Economic Review. https://doi.org/10.1093/wber/lhz002
Joint Committee on Taxation. (2018). General Explanation of Public Law 115–97. https://www.jct.gov/publications.html?func=startdown&id=5152. Accessed 28 September 2020.
Keightley, M. P., & Stupak, J. M. (2015). Corporate tax base erosion and profit shifting (BEPS): An examination of the data. Congressional Research Service. https://www.fas.org/sgp/crs/misc/R44013.pdf
Klaassen, P., & Bobeldijk, A. (2019). Country-by-country reporting and the effective tax rate: How effective is the effective tax rate in detecting tax avoidance in country-by-country reports? Intertax, 47(12), 1057–1069.
Laplante, S. K., & Nesbitt, W. L. (2017). The relation among trapped cash, permanently reinvested earnings, and foreign cash. Journal of Corporate Finance, 44, 126–148. https://doi.org/10.1016/j.jcorpfin.2017.03.005
Mesias, R. (2015). The coordinated direct investment survey guide 2015. International Monetary Fund. https://www.elibrary.imf.org/abstract/IMF069/22557-9781513519418/22557-9781513519418/22557-9781513519418.xml
Mock, R. P., & Simon, A. (2010). Permanently reinvested earnings: Priceless. Austl. Tax F., 25, 535.
Country-by-country reporting. Holding multinational corporations to account wherever they are. Task force on financial integrity and economic development
Mutti, J., & Grubert, H. (2004). Empirical asymmetries in foreign direct investment and taxation. Journal of International Economics, 62(2), 337–358. https://doi.org/10.1016/S0022-1996(03)00016-3
OECD. (2008). OECD Benchmark definition of foreign direct investment (BD4).
OECD. (2013). Addressing base erosion and profit shifting. OECD. www.keepeek.com/Digital-Asset-Management/oecd/taxation/addressing-base-erosion-and-profit-shifting_9789264192744-en
OECD. (2015). Measuring and monitoring BEPS, Action 11. OECD. https://www.oecd-ilibrary.org/content/book/9789264241343-en. Accessed 28 September 2020.
OECD. (2018). OECD/G20 inclusive framework on BEPS: Progress report July 2017–June 2018—OECD. OECD. https://www.oecd.org/ctp/inclusive-framework-on-beps-progress-report-june-2017-july-2018.htm. Accessed 28 September 2020.
OECD. (2019). Programme of work to develop a consensus solution to the tax challenges arising from the digitalisation of the economy. OECD. https://www.oecd.org/tax/beps/programme-of-work-to-develop-a-consensus-solution-to-the-tax-challenges-arising-from-the-digitalisation-of-the-economy.pdf. Accessed 28 September 2020.
Setser, B. (2019). Why the U.S. tax reform’s international provisions need to be reformed. Council on Foreign Relations. https://www.cfr.org/blog/why-us-tax-reforms-international-provisions-need-be-reformed. Accessed 28 September 2020.
Sikka, P., & Murphy, R. (2015). Unitary taxation: Tax base and the role of accounting (ICTD working paper 34). International Centre for Tax and Development.
Spengel, C., Elschner, C., Endres, D., Bartholmess, A., Dressler, D., Evers, L., et al. (2014). Effective tax levels using the Devereux/Griffith methodology. Project for the EU Commission TAXUD/2013/CC/120.
Stewart, J. (2014). PwC/world bank report ‘Paying Taxes 2014’: An assessment (IIIS discussion paper no. 442; pp. 1–10). Trinity College. https://www.tcd.ie/iiis/documents/discussion/abstracts/IIISDP442.php. Accessed 28 September 2020.
Sullivan, M. (2004). Data show dramatic shift of profits to tax havens. Tax Notes, 13, 1190–1200.
Tørsløv, T., Wier, L., & Zucman, G. (2020). The missing profits of nations. National Bureau of Economic research working paper, 2018, revised April 2020(24071). https://www.nber.org/papers/w24701
United States Joint Committee on Taxation. (2014). Technical explanation, estimated revenue effects, distributional analysis, and macroeconomic analysis of the Tax Reform Act of 2014: A discussion draft of the Chairman of the House Committee on Ways and Means to reform the Internal Revenue Code (Reference JCS-1–14.). United States Government Printing Office.
Wójcik, D. (2015). Accounting for globalization: Evaluating the potential effectiveness of country-by-country reporting. Environment and Planning C: Government and Policy, 33(5), 1173–1189. https://doi.org/10.1177/0263774X15612338
World Population Review. (2020). Median income by country 2020. https://worldpopulationreview.com/countries/median-income-by-country/
Wright, T., & Zucman, G. (2018). The exorbitant tax privilege. National Bureau of Economic Research Working Paper, 24983. https://www.nber.org/papers/w24983
Zucman, G. (2014). Taxing across borders: Tracking personal wealth and corporate profits. Journal of Economic Perspectives, 28(4), 121–148.
Acknowledgements
We are grateful for great comments from Kimberly Clausing, Tim Dowd, Miroslav Palanský, Alexandra Rusu, Caroline Schimanski and Francis Weyzig. Javier Garcia-Bernardo has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement number 638946). Petr Janský acknowledges support from the Czech Science Foundation (P403/18-21011S). To ensure transparency and replicability, and in line with open science practices, our entire database and code can be found here: https://osf.io/ew67b/.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
The original online version of this article was revised: The co-author name “Javier Garcia-Bernando” should read “Javier Garcia-Bernardo”.
Appendix
Appendix
List of countries by region
EU28 = Bosnia and Herzegovina (BA), Cyprus (CY), Romania (RO), Croatia (HR), Finland (FI), Luxembourg (LU), Spain (ES), Austria (AT), Latvia (LV), Slovak Rep. (SK), Poland (PL), Italy (IT), Norway (NO), United Kingdom (GB), Netherlands (NL), France (FR), Hungary (HU), Germany (DE), Portugal (PT), Greece (GR), Bulgaria (BG), Belgium (BE), Estonia (EE), Denmark (DK), Malta (MT), Sweden (SE), Slovenia (SI), Ireland (IE), Lithuania (LT).
Africa = Sierra Leone (SL), Uganda (UG), Sudan (SD), Lesotho (LS), Eritrea (ER), South Sudan (SS), Réunion (RE), Togo (TG), Saint Helena, Ascension and Tristan da Cunha (SH), Seychelles (SC), Gabon (GA), Morocco (MA), Egypt, Arab Rep. (EG), Sao Tome and Principe (ST), Mauritania (MR), Ghana (GH), Malawi (MW), Equatorial Guinea (GQ), Madagascar (MG), Djibouti (DJ), Botswana (BW), Angola (AO), Guinea-Bissau (GW), Mauritius (MU), Congo (Dem. Rep.) (CD), Zimbabwe (ZW), Guinea (GN), Cameroon (CM), Burundi (BI), Ethiopia (ET), Niger (NE), Mali (ML), Rwanda (RW), Benin (BJ), Comoros (KM), Cabo Verde (CV), Tanzania, United Republic of (TZ), Senegal (SN), Kenya (KE), Algeria (DZ), Central African Republic (CF), Ivory Coast (CI), Mayotte (YT), Zambia (ZM), The Gambia (GM), Liberia (LR), Somalia (SO), Nigeria (NG), Libya (LY), Mozambique (MZ), Eswatini (SZ), Burkina Faso (BF), South Africa (ZA), Tunisia (TN), Chad (TD), Congo, Rep. (CG).
Southeast_Asia = Malaysia (MY), Singapore (SG), Laos (LA), Cambodia (KH), Timor-Leste (TL), Viet Nam (VN), Philippines (PH), Indonesia (ID), Myanmar (MM), Thailand (TH), Brunei Darussalam (BN).
Northeast_Asia = Russia (RU), Taiwan (TW), China (CN), Japan (JP), Korea, Democratic People's Rep. of (KP), South Korea (KR), Mongolia (MN).
Middle_East = Lebanon (LB), Jordan (JO), Oman (OM), Kuwait (KW), Ukraine (UA), Israel (IL), Iran (IR), Bahrain, Kingdom of (BH), West Bank (PS), Syrian Arab Republic (SY), Turkey (TR), Yemen, Republic of (YE), Iraq (IQ), Qatar (QA), Saudi Arabia (SA).
OFCs = Cyprus (CY), St. Vincent and the Grenadines (VC), Togo (TG), Seychelles (SC), Anguilla (AI), Samoa (WS), Liechtenstein (LI), Belize (BZ), Isle of Man (IM), UK Caribbean (Montserrat (MS), Cayman Islands (KY), Turks and Caicos Islands (TC), Virgin Islands, British (VG)), Mauritius (MU), Panama (PA), St. Kitts and Nevis (KN), Guyana (GY), Cayman Islands (KY), Bermuda (BM), Netherlands Islands, Caribbean (CW), Guernsey (GG), Gibraltar (GI), Marshall Islands, Republic of (MH), Jersey (JE), Barbados (BB), Virgin Islands, British (VG), Liberia (LR), Bahamas, The (BS),
Source: Authors.
See Figs. 6, 7, 8, 9, 10, 11, 12, 13 and 14, Tables 5 and 6.
Source: Authors on the basis of the IRS CBCR data
Comparison between the 2016 and 2017 CBCR data releases.
Source: Authors on the basis of the IRS CBCR data. Notes: The absolute values of taxes paid minus accrued are displayed. The left side (blue) shows negative values of taxes paid minus taxes accrued. The right side (red) shows positive values
Tax accrued versus tax paid.
Source: Authors on the basis of the IRS CBCR data
Effective tax rate using tax accrued versus tax paid.
Source: Authors based on GDP data (x axis) and the Gallup World Poll survey on median income per capita (y axis), collected from World Population Review (2020)
Comparison between wages estimated using GDP per capita and median income per capita.
Source: Authors on the basis of various data sets. Notes: IRS data on companies with positives profit (CBCR*), IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Eurostat data and Orbis data on companies with positive profits (Orbis*). The correlation is visualized for the five indicators analysed: a employees, b turnover, c tangible assets, d profits, and e taxes accrued. For each of the coloured squares, representing the correlation between CBCR* and other databases, a scatter plot showing the outliers is shown
Correlation between the data sets.
Source: Authors on the basis of various data sets. Notes: aggregated values of IRS data on companies with positives profits (CBCR*) compared with the following data sets: IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Eurostat data and Orbis data on companies with positive profits (Orbis*) samples. Coverages below one (shaded in green) indicate higher values in the CBCR* data set. The list of countries by region is found in Appendix. Note that the BEA sample is more comparable with CBCR (not CBCR*), since both samples include all companies, including those with negative profits. Orbis uses fixed assets instead of tangible assets, which leads to the overestimation of assets in (a)
Differences between samples by region.
Source: Authors on the basis of various data sets. Notes: a Correlation between IRS data on companies with positives profits (CBCR*), IRS data on all companies (CBCR), IRS data on all CFCs with positive profits (CFC*), BEA data (BEA), BEA data without income cost adjustment (BEA 2), Orbis data on companies with positive profits (Orbis*), tax returns data from IRS (Dowd et al.) and statutory corporate income tax (CIT) rates. b ETR by region. The tax rate is unweighted for all but Dowd et al. and CIT, since data on profits and taxes by region is unavailable for those data sets. c–g Correlation between CBCR* and c CIT rates, d CBCR, e BEA, f Orbis*, and g Dowd et al. Countries where the estimations differ by more than 50% are annotated
Estimates of effective tax rates.
Source: Authors on the basis of the IRS CBCR, BEA and Orbis data
Top 10 countries with the largest negative (a) and positive (b) misaligned profits with the US included (in contrast with Fig. 4).
Source: Authors on the basis of the IRS CBCR data
Correlation between ETR and misalignment profits using accumulated earnings.
.
Rights and permissions
About this article
Cite this article
Garcia-Bernardo, J., Janský, P. & Tørsløv, T. Multinational corporations and tax havens: evidence from country-by-country reporting. Int Tax Public Finance 28, 1519–1561 (2021). https://doi.org/10.1007/s10797-020-09639-w
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10797-020-09639-w
Keywords
- Effective tax rate
- Profit shifting
- Tax haven
- Country-by-country reporting
- Multinational corporation
- Foreign direct investment
- Tax competition