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Profit Shifting and Measured Productivity of Multinational Firms

  • Giorgia Maffini

    ()

    (Centre for Business Taxation, Said Business School, University of Oxford)

  • Socrates Mokkas

    ()

    (Centre for Business Taxation, Said Business School, University of Oxford)

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    This paper examines the differences in total factor productivity (TFP) between multinationals and domestic firms before and after tax rate changes to investigate whether the host country corporate tax rate has a significant in fluence on the measured TFP advantage of multinational companies. Using a sample of approximately 16,000 European firms (1998-2004), we find that a 10 percentage points cut in the statutory corporate tax rate would increase multinationals' measured TFP by about 10 per cent relative to domestic firms, consistent with profit-shifting by multinationals. At the sample mean, this would imply a 44 per cent increase in the TFP advantage of multinationals.

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    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_09/WP0920.pdf
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    Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0920.

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    Date of creation: 2009
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    Handle: RePEc:btx:wpaper:0920
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