Taxation and the Multinational Firm

Egger, Peter; Stimmelmayr, Michael

doi:10.1142/9789811200595_0007

Cited by 5 publications

(4 citation statements)

References 60 publications

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“…Certain activities taking place at the MNE headquarters could relate to the production of a common input, which is important for the operations of the entire group (Becker and Riedel, 2012). As a consequence, investments in the ultimate parent (or headquarter) jurisdiction may be stickier, in the sense of being more difficult to reverse, compared to investments in foreign subsidiaries (Egger and Stimmelmayr, 2017). In addition, for a variety of non-financial reasons, it is likely to be more difficult for MNE groups to change the location of their headquarters in response to tax changes (OECD, 2020).…”

Section: Resultsmentioning

confidence: 99%

Tax impacts on MNE investment: evidence for cross-border relocation

Hanappi,

Whyman

2024

Preprint

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Multinational enterprises (MNEs) differ from other corporations—domestic groups or standalone entities—in various ways. Their organizational structures span large numbers of jurisdictions, which is likely to affect how they react to country-specific changes in taxation. We investigate MNE investment responses to taxation within and across a large number of countries using MNE entity- and group-level data. Our results show that MNE tax responsiveness is distinctively heterogenous within countries and that there are investment spillovers to and from countries that did not experience a tax change themselves, confirming the specific nature of MNE investment responses to taxation. Furthermore, it suggests that tax increases at host jurisdiction level may not lead to statistically and quantitatively significant investment responses at the MNE group level, while showing some evidence of positive cross-border tax effects on investment by entities in other jurisdictions within the same MNE group. This finding suggests that the well-document negative relationship between taxation and MNE investment within a host jurisdiction might partially mask the MNE rebalancing the location of its investment to other host jurisdictions in response to changes in cross-jurisdictional tax rate differentials rather than purely decreasing its investment globally.

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Section: Resultsmentioning

confidence: 99%

Tax impacts on MNE investment: evidence for cross-border relocation

Hanappi,

Whyman

2024

Preprint

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“…These findings suggest that the significance of the substance-weighted average STR in specification ( 2) is driven mostly by the special function of the MNE headquarters, 15 while STRs in subsidiary jurisdictions do not significantly reduce MNE group-level investment based on these estimates. This result aligns with the notion that investment in subsidiary locations can more easily be relocated across jurisdictions in response to tax changes, and is also consistent with the hypothesis that MNE groups relocate economic activity across subsidiaries in response to tax changes in the respective jurisdictions of their subsidiaries.…”

mentioning

confidence: 82%

Tax and Investment by Multinational Enterprises

2023

OECD Taxation Working Papers

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This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.Note by Turkey:The information in this document with reference to "Cyprus" relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the "Cyprus issue".

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“…While such data are not accessible to the public or researchers, they were made available for the year 2016 by the OECD in an aggregate and anonymized form for the first time in July 2020 (OECD 2018a). Despite these limitations, the data have been published already and ETRs have been estimated for U.S.-headquartered MNCs for years 2016 and 2017 (Garcia-Bernardo, Janský, and Mišák 2021) as well as for other MNCs (Garcia-Bernardo and Janský 2021; OECD 2020), with confidential MNC-level data used for Germany (Fuest et al 2022; Fuest, Hugger, and Neumeier 2022) and Italy (Bratta, Santomartino, and Acciari 2021). Future releases of such data for additional years should thus be of considerable research interest.…”

Section: Backward-looking Etrsmentioning

confidence: 99%

Corporate Effective Tax Rates for Research and Policy

Jánský

2022

Public Finance Review

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How much companies pay in corporate income taxes is often better captured by effective tax rates (ETRs) rather than by statutory ones. Economists further distinguish between those modeled using the law—forward-looking ETRs—and those estimated from actual data on companies’ profits and taxes—backward-looking ETRs. In this article, I move beyond this distinction, and I break down backward-looking ETRs according to the type of data used to estimate them. I focus on backward-looking ETRs that are estimated using companies’ balance sheet databases. Based on my review of recent findings, I argue that backward-looking ETRs—of multinational corporations in particular—have become more frequently estimated thanks to advances in data availability while also becoming more relevant as a result of ongoing global corporate tax reform debates.

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Taxation and the Multinational Firm

Cited by 5 publications

References 60 publications

Tax impacts on MNE investment: evidence for cross-border relocation

Tax impacts on MNE investment: evidence for cross-border relocation

Tax and Investment by Multinational Enterprises

Corporate Effective Tax Rates for Research and Policy

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