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; Wier, Ludvig.
I: The World Bank Economic Review, Bind 34, Nr. 3, 2020, s. 790–809.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Are Less Developed Countries More Exposed to Multinational Tax Avoidance?
T2 - Method and Evidence from Micro-Data
AU - Johannesen, Niels
AU - Tørsløv, Thomas
AU - Wier, Ludvig
PY - 2020
Y1 - 2020
N2 - This paper uses a global dataset with information about 210,000 corporations in 142 countries to investigate whether tax avoidance by multinational firms is more prevalent in less-developed countries. The paper proposes a novel approach to studying cross-border profit shifting, which has relatively low data requirements and is therefore particularly well-suited for the context of developing countries. The 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 - This paper uses a global dataset with information about 210,000 corporations in 142 countries to investigate whether tax avoidance by multinational firms is more prevalent in less-developed countries. The paper proposes a novel approach to studying cross-border profit shifting, which has relatively low data requirements and is therefore particularly well-suited for the context of developing countries. The 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 - tax systems in developing countries
KW - fiscal capacity
KW - international taxation
KW - profit shifting
KW - multinational firms
KW - tax avoidance
U2 - 10.1093/wber/lhz002
DO - 10.1093/wber/lhz002
M3 - Journal article
VL - 34
SP - 790
EP - 809
JO - World Bank Economic Review
JF - World Bank Economic Review
SN - 0258-6770
IS - 3
ER -
ID: 234023646