Leveling the playing field: Constraints on multinational profit shifting and the performance of national firms

• 成果类型: Article
• 署名作者: Gauss, P.; Kortenhaus, M.; Riedel, N.; Simmler, M.
• 署名单位: University of Munster; Leibniz Association; Ifo Institut; Johann Heinrich von Thunen Institute
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2024.105116
• 发表日期: 2024
• 关键词: multinational firms; International tax avoidance; Transfer pricing rules; Product market outcomes

摘要

A flourishing literature quantifies the corporate tax revenue losses from multinational profit shifting to lowtax economies. Other consequences of international tax avoidance have received little attention. In this paper, we empirically assess the widespread perception that international tax avoidance impacts product market outcomes and can put national competitors of multinational firms at a competitive disadvantage. The empirical identification strategy relies on changes in transfer pricing regulations that constrain multinational profit shifting by strategic mis-pricing of intra-firm trade. Based on rich data on firms in European high -tax countries, we show that tighter transfer pricing provisions raise multinational firms' effective tax costs and lower their sales. The sales and profits of affected firms' national competitors increase significantly, while mark-ups remain largely unchanged. We discuss policy implications of our findings.