A special double edition of Skatteforsk seminars was held on the 3rd of September. We were pleased to have Ninon Moreau-Kastler and Matthew Collin both from the International Tax Observatory at the Paris School of Economics, as speakers.
The seminar started with Ninon, the title of her presentation was The Global Allocation of Extractive Windfalls
Abstract: Who benefits from commodity price shocks? This paper studies the geographic allocation of extractive MNEs profits linked to prices shocks - usually called windfall profits. We combine new administrative data on the worldwide activity of MNEs with exhaustive oil, gas and mining production data at the firm level. We show that extractive MNEs generate between at least a quarter of their profits in non-extractive countries, and that contrary to usual evidence, profitability and effective tax rates display a U-shaped relationship in this sector. We identify the allocation of windfalls within the group by leveraging differences in (i) the product specialization of extractive firms and (ii) commodity price changes, in a shift-share design. We provide evidence of overbooking of windfall profits in low-tax countries. For 1$ increase in consolidated windfall profits, we observe a 0.2$ increase in tax havens, the rest being allocated to extractive affiliates.
This was followed by Matthew’s presentation: The End of Londongrad? Ownership Transparency and Offshore Investment in Real Estate
Abstract: This paper studies the impact of beneficial ownership transparency on foreign investment in the British real estate market. Passed following Russia’s invasion of Ukraine, the UK’s Economic Crime Act (ECA) requires offshore companies owning domestic property to publicly disclose their ultimate owners. Using a difference-in-differences framework, we find that the ECA led to a fall in offshore property purchases, particularly those made via tax havens, consistent with transparency raising the costs of new illicit investment. We find evidence that the policy reduced residential prices in neighborhoods that historically had a higher level of foreign corporate demand.