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Tax Avoidance and the Complexity of Multinational Enterprises

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  • Manon Francois
  • Vincent Vicard

Abstract

Does the complexity of the ownership structure of multinational enterprises' (MNEs) serve tax avoidance? We use firm-level cross-country data to show that affiliates belonging to more complex MNEs are more likely to bunch around zero profit, which is consistent with complexity enabling tax avoidance by multinationals. Our results show that only the more complex MNEs shift profits away from their high-tax affiliates, while MNEs with flat ownership structures do not display such pattern.

Suggested Citation

  • Manon Francois & Vincent Vicard, 2023. "Tax Avoidance and the Complexity of Multinational Enterprises," Working Papers 2023-04, CEPII research center.
    • Handle: RePEc:cii:cepidt:2023-04
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    More about this item

    Keywords

    Complexity; Firm organization; Multinational enterprises; Profit shifting; Tax avoidance;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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