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Authors
Idann Gidron (International Tax Observatory, PSE, Skatteforsk – Norwegian Centre for Tax Research), Gabriel Zucman (International Tax Observatory, PSE
UC Berkeley), Ludvig Wier (Denmark Ministry of Foreign Affairs)
Abstract
This paper constructs and analyzes time series of global corporate profits and international profit shifting covering the period 1975–2023. We obtain three main findings.
(i) The fraction of foreign profits shifted to tax havens has increased from 4 percent in 1975 to 34 percent in 2023.
(ii) The corporate tax revenue lost from global profit shifting has increased from 1 percent of corporate tax revenue collected in 1975 to 8 percent in 2023.
(iii) Profit shifting peaked on the eve of the Tax Cuts and
Jobs Act of 2018 and began to decline thereafter; by 2023, it was below its level of 2015, the year of the launch of the OECD Base Erosion and Profit Shifting project.
JEL codes
H26, E25, F23
Key words
multinationals, profit shifting, factor shares, taxation