Working Paper
Do multinational companies shift profits out of developing countries?
This study aims at providing causal evidence for tax-motivated profit-shifting out of developing countries, which, while often claimed to be the most affected, have been largely neglected in the literature. It uses global firm-level panel data from...
Working Paper
Estimating the scale of profit shifting and tax revenue losses related to foreign direct investment
Governments’ revenues are lower when multinational enterprises avoid paying corporate income tax by shifting their profits to tax havens. In this paper, we ask which countries’ tax revenues are affected most by this tax avoidance and how much. To...
Working Paper
Global profit shifting, 1975–2019
This paper constructs time series of global profit shifting covering the 2015–19 period, during which major international efforts were implemented to curb profit shifting. We find that (i) multinational profits grew faster than global profits, (ii)...
Journal Article
The dominant role of large firms in profit shifting
Globally, the largest 0.001 per cent of frms earn one-third of all corporate profts. Nonetheless, there is little understanding of how proft shifting difers across frm size. Using the universe of South African corporate tax returns and global...
Blog
$1 trillion in the shade: The annual profits multinational corporations shift to tax havens continues to climb and climb
by
Ludvig Wier, Gabriel Zucman
March 2023
About a decade ago, the world’s biggest economies agreed to crack down on multinational corporations’ abusive use of tax havens. This resulted in a 15...
Journal Article
Illicit financial flows and developing countries
Illicit financial flows (IFFs) constitute a major challenge for development in low-income countries, as domestic resource mobilization is imperative for providing crucial public services. This study focuses exclusively on the economic dimension of...
Blog
Empirical research is crucial for better tax enforcement in the developing world
I had the privilege to participate in the UNU-WIDER Winter School as one of the lecturers. In this blog, I explain my main takeaways for students and...
Working Paper
Fiscal consequences of corporate tax avoidance
Multinational corporations shift a large share of their foreign profits to tax havens and, due to this corporate tax avoidance, governments worldwide lose a portion of their tax revenues. In this paper we study the consequences of multinational tax...
Blog
New global estimates on profits in tax havens suggest the tax loss continues to rise
by
Ludvig Wier, Gabriel Zucman
December 2022
The world has been trying to curb profit shifting to tax havens for a decade, but consistent time series evaluating the impact of these reforms have...
Working Paper
The indirect costs of corporate tax avoidance exacerbate cross-country inequality
Corporate tax avoidance hampers domestic revenue mobilization and, with it, the development of lower- and middle-income countries. While a wide range of studies has shed light on the magnitude of profit shifting by multinational corporations, the...
Working Paper
Profit shifting by multinational corporations in Kenya
Illicit financial flows directly impact a country’s ability to raise, retain, and mobilize its own resources to finance sustainable development. Against a backdrop of a weak public financial position attributed to capital flight, tax avoidance, and...
Working Paper
Profit-shifting behaviour of emerging multinationals from India
This paper examines the profit-shifting behaviour of emerging multinational firms from India. It is found that the before-tax profitability of subsidiaries differs according to whether they were established directly or via an Offshore Financial...
Working Paper
Profit shifting by multinational corporations
Research on profit shifting by multinational corporations in developing countries is limited due to a lack of data. In this paper we use, for the first time, novel administrative data on the transactions of multinational corporations operating in...
Working Paper
Estimating profit shifting in South Africa using firm-level tax returns
Using the universe of South African corporate tax returns for 2009–14, we estimate profit- and debt-shifting responses in South Africa. We find evidence that South African subsidiaries engage in profit shifting and that profit-shifting responses to...
Research Brief
Revenue losses from tax-motivated mispricing in South Africa
New research provides the first direct evidence of tax-motivated transfer mispricing in a developing country. Using highly detailed firm-level customs data from the tax authority, the analysis calculates the difference between legitimate estimates of...
Blog
How multinationals continue to avoid paying hundreds of billions of dollars in tax: New research
by
Miroslav Palanský
October 2019
Tax havens have become a defining feature of the global financial system. Multinational companies can use various schemes to avoid paying taxes in...
Working Paper
Tax-motivated transfer mispricing in South Africa
This paper provides the first direct systematic evidence of profit shifting through transfer mispricing in a developing country. Using South African transaction-level customs data, I directly test for transfer price deviations from arm’s-length...
Research Brief
The impact of tax havens on South African revenue
The study uses a comparative analysis of foreign-owned firms operating in South Africa to show that firms with a parent registered in a tax haven tend to report 80% less in profits than similar firms without a parent in a tax haven. This is highly...
Working Paper
Big and ‘unprofitable’
Globally, the largest 0.001 per cent of firms earn roughly one-third of all corporate profits. Nonetheless, there is little understanding of how profit shifting differs across firm size. Using South African corporate tax returns from 2010–14, we...
In the media
SA-TIED researcher interviewed on tax haven research
SA-TIED researcher, Ludvig Wier, has featured in multiple South African news outlets explaining new research findings from the programme. Wier was invited to speak to anchors from South Africa’s national news channels, SABC and eNCA. He was also...
Journal Article
Tax-motivated transfer mispricing in South Africa
This paper provides the first direct systematic evidence of profit shifting through transfer mispricing in a developing country. Using South African transaction-level customs data, the author directly tests for transfer price deviations from arm's...
Working Paper
Illicit financial flows and the Global South
Illicit financial flows (IFFs) constitute a major challenge for development in the Global South, as domestic resource mobilization is imperative for providing crucial public services. While several methods offer to measure the extent of IFFs, each...
Working Paper
Global minimum corporate income tax
This paper simulates the impact of the global minimum corporate tax rate (GMCTR) in Uganda by estimating the difference between the mechanical and the behavioural changes in tax revenue. Overall, implementation of GMCTR will increase tax revenue, and...
Blog
Overcoming the challenge of illicit financial flows: Four pieces of advice for policymakers
From profit shifting to sanction evasion, illicit financial flows divert funds away from essential poverty-fighting and infrastructure programs. A...
Working Paper
An evaluation of interest deduction limitations to counter base erosion in South Africa
This paper aims to describe funding structures of companies liable for tax in South Africa and how this relates to other characteristics, including ownership, of the companies. The research that the paper reports on was performed as descriptive...
Presentation
Caroline Schimanski on taxing multinational corporations in Uganda
World Bank's hybrid conference on global tax equity is organized on 22-23 September 2022. Caroline Schimanski, a World Bank and African Development Bank consultant, gives a presentation on a WIDER Working Paper at the conference. The topic of...
Thu, 22 September 2022
Hybrid,
United States
Past event
News
Press Release: New research reveals close to $1 trillion in profits shifted to tax havens
A new research paper published by the United Nations University World Institute for Development Economics Research (UNU-WIDER) shows the first global estimates of profits shifted to tax havens between 1975-2019. The study documents a remarkable increase in profit shifting, with close to $1 trillion or 40% of multinational profits shifted to tax havens in 2019. Globally, 10% of corporate tax revenues are lost as a result.
In the media
Study on global tax avoidance garners worldwide attention
A new WIDER Working Paper has brought attention around the world to government revenue loss from tax avoidance. The study finds that, globally, low- and lower middle-income countries are hit the hardest; in terms of regions, losses are most intense...
Working Paper
The case of taxing multinational corporations in Uganda
We study how large domestic firms and multinational corporations compare in their effective tax rates and whether there is evidence of profit shifting out of Uganda. Using administrative data from the Uganda Revenue Authority and regression analysis...