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Which multinationals can escape high Statutory Tax Rates? The Profit-Shifting strategy to reduce taxes

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  • Ángela Castillo-Murciego
  • Julio López-Laborda

Abstract

Multinationals can escape high Statutory Tax Rates (STRs) by way of Profit-Shifting (P-S) and in this form, reduce the Effective Tax Rate (ETR) they ultimately pay. In this article, we find evidence for Spain consistent with P-S, since the relationship between STRs and ETRs becomes negative for multinationals with characteristics that may facilitate P-S, i.e. being very large, having at least one tax haven affiliate, and owning Intellectual Property.

Suggested Citation

  • Ángela Castillo-Murciego & Julio López-Laborda, 2024. "Which multinationals can escape high Statutory Tax Rates? The Profit-Shifting strategy to reduce taxes," Applied Economics Letters, Taylor & Francis Journals, vol. 31(6), pages 550-554, March.
    • Handle: RePEc:taf:apeclt:v:31:y:2024:i:6:p:550-554
    DOI: 10.1080/13504851.2022.2140106
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