Abstract:International corporate tax is an important source of government revenue, especially in lower-income countries. An innovative study of the scale of this problem was carried out by International Monetary Fund researchers and published in 2016. We first re-estimate their model and then explore the effects of introducing higher-quality revenue data from the International Centre

The authors of this paper grant to the IDS and the ICTD a perpetual, irrevocable, worldwide, royalty-free, non-exclusive licence, or sublicence, to reproduce, communicate to the public, use, adapt, publish, distribute, display and transmit the work in any and all media, and to sublicense others (including the Crown) to reproduce, communicate to the public, use, adapt, publish, distribute, display and transmit the work in any and all media, for non-commercial purposes and with appropriate credit being given to the authors and ICTD funders.A catalogue record for this publication is available from the British Library.This work has been licensed by the copyright holder for distribution in electronic format via any medium for the lifetime of the OpenDocs repository for the purpose of free access without charge and can be found at http://opendocs.ids.ac.uk/opendocs/ Also Measuring Misalignment: the Location of US Multinationals' Economic Activity Versus the Location of their Profits Alex Cobham and Petr Janský SummaryA major international effort -the OECD Base Erosion and Profit Shifting (BEPS) initiative -aims to reduce the extent of misalignment between the profits of multinational groups, and the location of their real economic activity. Recent research using balance sheet data has shown major misalignments, with a number of small jurisdictions capturing a tax base disproportionate to their economic activity, but has also revealed the limitations of available balance sheet data for lower-income countries. This paper uses survey data on the international operations of USheadquartered multinational groups to expand the research to a broader group of host countries (albeit for only one home economy), and confirms major misalignments of profit. A small number of 'profit-haven' jurisdictions are seen to have captured a disproportionate share of total profits, resulting in serious disadvantages for most G20 countries, regardless of income level.

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SummaryUnder the current system of separate accounting, tax-motivated international profit shifting results in misalignment of profits and real economic activity. While the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting initiative aims to measure and curtail this, critics claim serious progress is only possible with greater emphasis on formulary apportionment methods (Picciotto 2013), or other methods outside the present international tax architecture (IMF 2014). In this paper we use the leading global database of company balance sheets to compare the distribution of profit and potential apportionment factors. Although data coverage is problematic for developing countries, we find that apportioning profit according to measures of actual economic activity would result in a major redistribution of the tax base at the expense of a particular group of jurisdictions, and in most cases towards the lower-income countries in the sample. International loss consolidation facilitated by a global switch to unitary taxation would reduce the overall tax base by around 12 per cent.