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Profit Shifting and Measured Productivity of Multinational Firms

Author

Listed:
  • Giorgia Maffini

    (Centre for Business Taxation, Said Business School, University of Oxford)

  • Socrates Mokkas

    (Centre for Business Taxation, Said Business School, University of Oxford)

Abstract

This paper examines the differences in total factor productivity (TFP) between multinationals and domestic firms before and after tax rate changes to investigate whether the host country corporate tax rate has a significant in fluence on the measured TFP advantage of multinational companies. Using a sample of approximately 16,000 European firms (1998-2004), we find that a 10 percentage points cut in the statutory corporate tax rate would increase multinationals' measured TFP by about 10 per cent relative to domestic firms, consistent with profit-shifting by multinationals. At the sample mean, this would imply a 44 per cent increase in the TFP advantage of multinationals.

Suggested Citation

  • Giorgia Maffini & Socrates Mokkas, 2009. "Profit Shifting and Measured Productivity of Multinational Firms," Working Papers 0920, Oxford University Centre for Business Taxation.
    • Handle: RePEc:btx:wpaper:0920
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    References listed on IDEAS

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    Cited by:

    1. Sebastian Beer & Jan Loeprick, 2015. "Profit shifting: drivers of transfer (mis)pricing and the potential of countermeasures," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 426-451, June.

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    More about this item

    Keywords

    profit shifting; multinationals; productivity;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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