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The Impact of Offshore Profit Shifting on the Measurement of GDP: The Case of the UK

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  • Giordano Mion
  • Manuel Tong Koecklin

Abstract

In this paper we analyse the global distribution of profits declared by MNEs operating in the UK using the Orbis database. Our investigations cover the period 2007-2017 and focus on entities reporting non-consolidated accounts and belonging to corporate Global Ultimate Owners active worldwide. Our analyses suggest that, compared to actual declared profits, profits distributed according to a simple apportionment rule based on companies’ revenues shares within each MNE group would look quite different. For example, MNEs operating in the UK reported in 2017 41 billion GBP (representing about 1.91 per cent of UK GDP) more than what they would have reported based on our apportionment rule. We document this and other findings and while also digging deeper in terms of industry patterns and providing a number of robustness checks.

Suggested Citation

  • Giordano Mion & Manuel Tong Koecklin, 2021. "The Impact of Offshore Profit Shifting on the Measurement of GDP: The Case of the UK," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2021-05, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2021-05
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    References listed on IDEAS

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    8. Giorgia Maffini & Socrates Mokkas, 2011. "Profit Shifting and Measured Productivity of Multinational Firms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(1), pages 1-20, February.
    9. Kimberly A. Clausing, 2016. "The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 905-934, December.
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    Cited by:

    1. Josh Martin & Rebecca Riley, 2023. "Productivity measurement - Reassessing the production function from micro to macro," Working Papers 033, The Productivity Institute.

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    More about this item

    Keywords

    apportionment; intangible assets; orbis; united kingdom; profit shifting;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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