Measuring The Location Of Production In A World Of Intangible Productive Assets, Fdi, And Intrafirm Trade
As production comes to depend more on intangible productive assets, the location of production by multinational firms becomes increasingly ambiguous. The reason is that, within the firm, these assets have no clear geographical location, but only a nominal location determined by the firm's tax or legal strategies. The effects of these location ambiguities, and the resulting distortions for tax reasons of the location of production, are described. It is estimated that for U.S. firms' affiliates in a few tax havens alone, the exaggeration of value added in those locations amounted, in 2005, to about 4 percent of worldwide affiliate sales, and the exaggeration of sales to about 10 percent of worldwide affiliate sales. Some possibilities for estimating the location of production that could supersede the present dependence on accounting measures distorted by tax-saving policies are described. Copyright 2010 The Author. Journal compilation International Association for Research in Income and Wealth 2010.
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Volume (Year): 56 (2010)
Issue (Month): s1 (06)
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- Fuest, Clemens & Hemmelgarn, Thomas & Ramb, Fred, 2006. "How would formula apportionment in the EU affect the distribution and the size of the corporate tax base? An analysis based on German multinationals," Discussion Paper Series 1: Economic Studies 2006,20, Deutsche Bundesbank, Research Centre.
- James R. Hines Jr., 2005.
"Do Tax Havens Flourish?,"
in: Tax Policy and the Economy, Volume 19, pages 65-100
National Bureau of Economic Research, Inc.
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