Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms
American Economic Review, 2019, 109(8), 2921-53
40 Pages Posted: 17 Oct 2020
Date Written: March 5, 2019
Abstract
In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable pro fits that multinational and domestic companies report. I find that the ratio of taxable pro fits to total assets reported by foreign multinational subsidiaries is half that of comparable domestic standalone. The majority of the difference is attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits. I document how the estimated difference is related to profit shifting and show that using accounting data leads to much smaller estimates of the difference.
JEL Classification: H25, H32
Suggested Citation: Suggested Citation