Multinational corporations and tax havens: evidence from country‑by‑country reporting

A growing body of economics literature shows that multinational corporations (MNCs) shift their profts 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 frst time. With each of the data sets, we analyse the efective tax rates that US MNCs face in each country and the amount of profts they report. Using country-by-country reporting data, we have been able to establish that lower efective corporate tax rates are associated with higher levels of reported profts when compared with diferent indicators of real economic activity. This corresponds to the notion that MNCs often shift profts to countries with low efective tax rates—without also shifting substantive economic activity. Consequently, we identify the most important tax havens for US MNCs as countries with both low efective tax rates and high profts misaligned with economic activity.