Intangible assets, like patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit. Moreover, they constitute a major source of profit shifting opportunities in multinational enterprises (MNEs) due to a highly intransparent transfer pricing process. This paper argues that for both reasons, MNEs have an incentive to locate intangible property at affiliates with a relatively low corporate tax rate. Using panel data on European MNEs and controlling for unobserved time-constant heterogeneity between affiliates, we find that the lower a subsidiary's tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern.JEL classification: H25, F23, H26, C33

Corporate patents are perceived to be the key profit-drivers in many multinational enterprises (MNEs). Moreover, as the transfer pricing process for royalty payments is often highly intransparent, they also constitute a major source of profit shifting opportunities between multinational entities. For both reasons, MNEs have an incentive to locate their patents at affiliates with a relatively small corporate tax rate. Our paper empirically tests for this relationship by exploiting a unique dataset which links information on patent applications to micro panel data for European MNEs. Our results suggest that the corporate tax rate (differential to other group members) indeed exerts a negative effect on the number of patents filed by a subsidiary. The effect is quantitatively large and robust against controlling for affiliate size. The findings prevail if we additionally account for royalty withholding taxes. Moreover, binding 'Controlled ForeignCompany' rules tend to decrease the number of patent applications.JEL classification: H25, F23, H26, C33

This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. The central result is that parents' positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature. Acknowledgments:We thank participants at the

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The purpose of this paper is to assess whether the timing of elections affects tax policy choices. To do so, we exploit information on the German local business tax which is set autonomously by German municipalities. As the dates for local council elections vary across German states, the data allows us to disentangle effects related to the timing of elections from common trends. The findings support the notion of a political cycle in tax setting as the growth in local business tax rates is significantly reduced in the election year and the year prior to the election, while it significantly increases in the year after the election. This pattern turns out to be robust against a number of sensitivity checks.

BackgroundThe Zambia Malaria Indicator Survey (ZMIS) of 2006 was the first nation-wide malaria survey, which combined parasitological data with other malaria indicators such as net use, indoor residual spraying and household related aspects. The survey was carried out by the Zambian Ministry of Health and partners with the objective of estimating the coverage of interventions and malaria related burden in children less than five years. In this study, the ZMIS data were analysed in order (i) to estimate an empirical high-resolution parasitological risk map in the country and (ii) to assess the relation between malaria interventions and parasitaemia risk after adjusting for environmental and socio-economic confounders.MethodsThe parasitological risk was predicted from Bayesian geostatistical and spatially independent models relating parasitaemia risk and environmental/climatic predictors of malaria. A number of models were fitted to capture the (potential) non-linearity in the malaria-environment relation and to identify the elapsing time between environmental effects and parasitaemia risk. These models included covariates (a) in categorical scales and (b) in penalized and basis splines terms. Different model validation methods were used to identify the best fitting model. Model-based risk predictions at unobserved locations were obtained via Bayesian predictive distributions for the best fitting model.ResultsModel validation indicated that linear environmental predictors were able to fit the data as well as or even better than more complex non-linear terms and that the data do not support spatial dependence. Overall the averaged population-adjusted parasitaemia risk was 20.0% in children less than five years with the highest risk predicted in the northern (38.3%) province. The odds of parasitaemia in children living in a household with at least one bed net decreases by 40% (CI: 12%, 61%) compared to those without bed nets.ConclusionsThe map of parasitaemia risk together with the prediction error and the population at risk give an important overview of the malaria situation in Zambia. These maps can assist to achieve better resource allocation, health management and to target additional interventions to reduce the burden of malaria in Zambia significantly. Repeated surveys will enable the evaluation of the effectiveness of on-going interventions.

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This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. The central result is that parents' positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature. Acknowledgments:We thank participants at the