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Tax Haven Activities and the Tax Liabilities of Multinational Groups

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  • Giorgia Maffini

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    (University of Oxford Centre for Business Taxation and University of Warwick.)

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    Abstract

    This paper investigates the effect of tax haven operations on the tax liabilities of corporate groups headquartered in 15 OECD countries. Using consolidated accounting data from ORBIS (2003-2007), this work finds that, at the mean, an additional tax haven subsidiary reduces tax liabilities over total assets by 7.4 per cent in the long run. At the mean, the marginal effective tax rate (ETR) of a corporate group with tax haven subsidiaries is one percentage point lower than it is for groups without low-tax offshore operations. The results also show that the marginal ETR of companies headquartered in countries with a territorial system is lower than that of companies headquartered in jurisdictions with a worldwide system of taxation on corporate profits. More specifically, corporate groups headquartered in the United States have the highest marginal ETR.

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    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_09/WP0925.pdf
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    Bibliographic Info

    Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0925.

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    Date of creation: 2009
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    Handle: RePEc:btx:wpaper:0925

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    Related research

    Keywords: Corporate Income Tax; Multinationals; Profit shifting; Tax Havens;

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    1. Luc Laeven & Harry Huizinga & Gaetan Nicodeme, 2007. "Capital Structure and International Debt Shifting," IMF Working Papers 07/39, International Monetary Fund.
    2. Dhammika Dharmapala, 2008. "What Problems and Opportunities are Created by Tax Havens?," Working Papers 0820, Oxford University Centre for Business Taxation.
    3. Altshuler, Rosanne & Grubert, Harry, 2003. "Repatriation taxes, repatriation strategies and multinational financial policy," Journal of Public Economics, Elsevier, vol. 87(1), pages 73-107, January.
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    Cited by:
    1. Shafik Hebous, 2011. "Money at the Docks of Tax Havens: A Guide," CESifo Working Paper Series 3587, CESifo Group Munich.

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