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The Race Between Tax Enforcement and Tax Planning: Evidence From a Natural Experiment in Chile

Author

Listed:
  • Sebastián Bustos
  • Dina Pomeranz
  • Juan Carlos Suárez Serrato
  • José Vila-Belda
  • Gabriel Zucman

Abstract

Profit shifting by multinational corporations is thought to reduce tax revenue around the world. This paper provides a comprehensive analysis of the introduction of standard regulations to limit profit shifting. Using administrative tax and customs data from Chile, we find that the reform was ineffective in reducing multinationals’ transfers to lower-tax countries and did not significantly raise tax payments. Interviews with tax advisors and employment history data reveal a drastic increase in consulting services. Our results illustrate that when enforcement can be circumvented by sophisticated tax planning, it can benefit tax consultants at the expense of tax authorities and taxpayers.

Suggested Citation

  • Sebastián Bustos & Dina Pomeranz & Juan Carlos Suárez Serrato & José Vila-Belda & Gabriel Zucman, 2022. "The Race Between Tax Enforcement and Tax Planning: Evidence From a Natural Experiment in Chile," NBER Working Papers 30114, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30114
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    Cited by:

    1. Toledo, Katia & Alvarado, Alfredo, 2023. "Tackling BEPS in the Global South: Evidence from Peru’s tax reform," Economic Systems, Elsevier, vol. 47(3).
    2. Jiao Li & Duccio Gamannossi degl'Innocenti & Matthew D. Rablen, 2023. "Marketed tax avoidance: an economic analysis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(3), pages 753-788, July.
    3. Katarzyna Bilicka & Evgeniya Dubinina & Petr Janský, 2022. "Fiscal consequences of corporate tax avoidance," WIDER Working Paper Series wp-2022-97, World Institute for Development Economic Research (UNU-WIDER).
    4. Braun, Anna-Sophie & Koch, Reinald & Sureth, Caren, 2025. "Tax complexity and firm value," arqus Discussion Papers in Quantitative Tax Research 299, arqus - Arbeitskreis Quantitative Steuerlehre.
    5. Gabriel Zucman, 2023. "Globalisation, taxation and inequality," Fiscal Studies, John Wiley & Sons, vol. 44(3), pages 229-235, September.
    6. Sarah Clifford & Jakob Miethe & Camille Semelet, 2025. "The Distribution of Profit Shifting," EconPol Policy Brief 78, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Ingar Haaland & Christopher Roth & Stefanie Stantcheva & Johannes Wohlfart, 2024. "Measuring What Is Top of Mind," ECONtribute Discussion Papers Series 298, University of Bonn and University of Cologne, Germany.
    8. Bilicka, Katarzyna & Scur, Daniela, 2024. "Organizational capacity and profit shifting," Journal of Public Economics, Elsevier, vol. 238(C).
    9. Katarzyna A. Bilicka & Michael P. Devereux & İrem Güçeri, 2024. "Tax Policy, Investment and Profit Shifting," NBER Working Papers 33132, National Bureau of Economic Research, Inc.
    10. Katarzyna Bilicka & Michael Devereux & Irem Güçeri, 2023. "Tax-Avoidance Networks and the Push for a “Historic” Global Tax Reform," Tax Policy and the Economy, University of Chicago Press, vol. 37(1), pages 57-108.
    11. Viertola, Marika, 2024. "Transfer (mis)pricing of multinational enterprises: evidence from Finland," Working Papers 162, VATT Institute for Economic Research.
    12. Ingar Haaland & Christopher Roth & Stefanie Stantcheva & Johannes Wohlfart, 2025. "Understanding Economic Behavior Using Open-Ended Survey Data," Journal of Economic Literature, American Economic Association, vol. 63(4), pages 1244-1280, December.
    13. Wladislaw Mill & Cornelius Schneider, 2023. "The Bright Side of Tax Evasion," CESifo Working Paper Series 10615, CESifo.
    14. Laudage Teles, Sabine & Riedel, Nadine & Strohmaier, Kristina, 2024. "On the effects of anti-profit shifting regulations: A developing country perspective," Journal of Public Economics, Elsevier, vol. 235(C).
    15. Enea Baselgia, 2023. "The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty," Working Papers 019, EU Tax Observatory.
    16. Knoll, Bodo & Kruse-Becher, Sanne & Riedel, Nadine, 2023. "The impact of transfer pricing laws on import mis-pricing – Evidence from Denmark," Economics Letters, Elsevier, vol. 233(C).
    17. Enea Baselgia, 2025. "The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty," CESifo Working Paper Series 11615, CESifo.

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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