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A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens

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  • Sébastien Laffitte
  • Farid Toubal

Abstract

Using public macro-level data on activities of multinationals, we document that U.S. firms geographically disconnect sales and production to avoid paying corporate taxes. We revisit both theoretically and empirically the location determinants of foreign platforms and show that market access motives are far less relevant when considering tax havens. We characterize these countries and shed light on the attractiveness of different tax havens for specific sectors of activity. Our quantification shows that profit shifting by foreign sales platforms in tax havens amounts to about $80bn in 2013. Our findings contribute to the recent policy debate on the reform of international taxation.

Suggested Citation

  • Sébastien Laffitte & Farid Toubal, 2019. "A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens," Working Papers 2019-02, CEPII research center.
  • Handle: RePEc:cii:cepidt:2019-02
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    Cited by:

    1. Sunghoon Hong, 2022. "Tax treaties and foreign equity holding companies of multinational corporations," Review of Managerial Science, Springer, vol. 16(2), pages 483-520, February.
    2. Jean-Charles Bricongne & Samuel Delpeuch & Margarita Lopez Forero, 2021. "Regional Productivity Slowdown, Tax Havens and MNEs’ Intangibles: where is Measured Value Creation?," Working papers 835, Banque de France.
    3. Baptiste Souillard, 2020. "Import Competition And Corporate Tax Avoidance: Evidence From The China Shock," Working Papers ECARES 2020-30, ULB -- Universite Libre de Bruxelles.
    4. Jean-Charles Bricongne & Samuel Delpeuch & Margarita Lopez Forero, 2021. "Productivity Slowdown, Tax Havens and MNEs’ Intangibles: where is measured value creation?," Documents de recherche 21-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.

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    More about this item

    Keywords

    International Taxation; Tax avoidance; Foreign platforms; Tax havens; Profit shifting; Firms' organization;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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