International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

By Sebastian Beer, Ruud A. de Mooij, Li Liu

July 23, 2018

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Sebastian Beer, Ruud A. de Mooij, and Li Liu. International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots, (USA: International Monetary Fund, 2018) accessed December 26, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions. Moreover, it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, on average, a 1 percentage-point lower corporate tax rate will expand before-tax income by 1 percent—an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research.

Subject: Corporate income tax, Corporate taxes, National accounts, Personal income, Revenue administration, Tax avoidance, Taxes

Keywords: Company debt, Company transaction, Consensus estimate, Corporate income tax, Corporate taxation, Corporate taxes, Debt shifting, Dependent variable, Elasticity estimate, Firm FE, Global, Host-country tax, International tax avoidance, Meta analysis, Multinationals, Passive income, Personal income, Profit reallocation, Profit shifting, Residence country, Single tax, Tax avoidance, Tax rate, WP

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/168
Stock No:

WPIEA2018168
ISBN:

9781484363997
ISSN:

1018-5941

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