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Tax Haven Activities and the Tax Liabilities of Multinational Groups

Author

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  • Giorgia Maffini

    () (University of Oxford Centre for Business Taxation and University of Warwick.)

Abstract

This paper investigates the effect of tax haven operations on the tax liabilities of corporate groups headquartered in 15 OECD countries. Using consolidated accounting data from ORBIS (2003-2007), this work finds that, at the mean, an additional tax haven subsidiary reduces tax liabilities over total assets by 7.4 per cent in the long run. At the mean, the marginal effective tax rate (ETR) of a corporate group with tax haven subsidiaries is one percentage point lower than it is for groups without low-tax offshore operations. The results also show that the marginal ETR of companies headquartered in countries with a territorial system is lower than that of companies headquartered in jurisdictions with a worldwide system of taxation on corporate profits. More specifically, corporate groups headquartered in the United States have the highest marginal ETR.

Suggested Citation

  • Giorgia Maffini, 2009. "Tax Haven Activities and the Tax Liabilities of Multinational Groups," Working Papers 0925, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:0925
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    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_09/WP0925.pdf
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    References listed on IDEAS

    as
    1. Huizinga, Harry & Laeven, Luc & Nicodeme, Gaetan, 2008. "Capital structure and international debt shifting," Journal of Financial Economics, Elsevier, vol. 88(1), pages 80-118, April.
    2. Altshuler, Rosanne & Grubert, Harry, 2003. "Repatriation taxes, repatriation strategies and multinational financial policy," Journal of Public Economics, Elsevier, vol. 87(1), pages 73-107, January.
    3. Dhammika Dharmapala, 2008. "What problems and opportunities are created by tax havens?," Oxford Review of Economic Policy, Oxford University Press, vol. 24(4), pages 661-679, winter.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:prg:jnlefa:v:2017:y:2017:i:4:id:199:p:31-46 is not listed on IDEAS
    2. Hebous, Shafik & Lipatov, Vilen, 2014. "A journey from a corruption port to a tax haven," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 739-754.
    3. Shafik Hebous, 2014. "Money at the Docks of Tax Havens: A Guide," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(3), pages 458-485, September.
    4. repec:eee:crpeac:v:33:y:2015:i:c:p:5-23 is not listed on IDEAS

    More about this item

    Keywords

    Corporate Income Tax; Multinationals; Profit shifting; Tax Havens;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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