Big and 'unprofitable': How 10 per cent of multinational firms do 98 per cent of profit shifting

Globally, the largest 0.001 per cent of firms earn roughly one-third of all corporate profits. Nonetheless, there is little understanding of how profit shifting differs across firm size. Using South African corporate tax returns from 2010-14, we investigate the link between firm size and profit shifting. We estimate that firms owned by a parent in a tax haven avoid taxation on as much as 80 per cent of their true income. However, this aggregate tax loss conceals large differences across firms. The majority of firms shift little income to tax havens, while a few large firms shift a lot.