Should countries control international profit shifting?
(2006) Journal of International Economics — Vol. 68, n° 1, p. 24-37 (2006)
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- Abstract
- We present a fiscal competition model with two policy instruments: the level of corporate taxation and the tightness of control of profit shifting by multinational firms (MNF). We show that a country may optimally decide not to monitor the MNF for two reasons. Firstly, this country becomes an attractive location for MNF activity despite a high corporate tax. Secondly, as the profits of the MNF become mobile, the focus of tax competition is shifted. Taxation then influences both an MNF's location and the place where it declares its profits.
- Affiliations
Université de la Méditérannée
Citations
Peralta, S., Wauthy, X., & Van Ypersele, T. (2006). Should countries control international profit shifting? Journal of International Economics, 68(1), 24-37. https://doi.org/10.1016/j.jinteco.2005.06.003 (Original work published 2006)