Profit Shifting during Foreign Tax Holidays

• 成果类型: Article
• 署名作者: Chow, Travis K.; Hoopes, Jeffrey L.; Maydew, Edward L.
• 署名单位: University of Hong Kong; University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0376
• 发表日期: 2023
• 页码: 115-142
• 关键词: MULTINATIONAL-CORPORATIONS; INFORMATION; disclosure; noncompliance; incentives; liability; audits; havens

摘要

We undertake the first empirical analysis of profit shifting by U.S. firms during foreign tax holidays. We show that foreign tax holidays have become a prevalent and powerful tax planning strategy among U.S. firms. We find that U.S. firms significantly increase their outbound profit shifting while participating in foreign tax holidays. However, we also find that profit shifting associated with tax holidays comes at the cost of increased tax uncertainty. Our results have important implications for policy making and for understanding firm behavior.