Profit shifting from lower income countries

Transcription

1 from lower income countries Petr Janský Charles University, Prague November 8, 2017, UNCTAD, Geneva

2 Profit shifting Overview (with Alex Cobham) As a type of illicit financial flows Multinationals shifting profits to tax havens Petr Janský Profit shifting from lower income countries 2 / 13

3 Petr Janský Profit shifting from lower income countries 3 / 13

4 Profit shifting channels Debt shifting Location of intangible assets Strategic transfer pricing Petr Janský Profit shifting from lower income countries 4 / 13

5 Empirical estimates of profit shifting Evidence: profit shifting, channels, countries Limited evidence: scale, lower income countries Petr Janský Profit shifting from lower income countries 5 / 13

6 Profit shifting studies: international estimates UNCTAD (2015) IMF s Crivelli et al (2016) Clausing (2016) Cobham and Janský (2017) Petr Janský Profit shifting from lower income countries 6 / 13

7 Profit shifting studies: methodology UNCTAD (2015): Profits are lower when there is more investment from tax havens. IMF s Crivelli et al (2016): Tax havens have negative spillover effects on corporate tax bases. Clausing (2016): US multinationals profits are sensitive to low corporate tax rates. Cobham and Janský (2017): Misalignment between the location of US multinationals economic activity and the location of their profits. Petr Janský Profit shifting from lower income countries 7 / 13

8 Profit shifting studies: results UNCTAD (2015): $200 billion (8% of corporate income tax, $90 billion lower-income countries). IMF s Crivelli et al (2016): $600 billion ($400 billion for OECD countries (1% of GDP) and $200 billion for lower-income countries (1.3% of GDP)). Clausing (2016): $280 billion for a group of 25 countries (around $100 billion for the US; %20 of corporate income tax). Cobham and Janský (2017): Up to $133 for US multinationals in 35 countries. Petr Janský Profit shifting from lower income countries 8 / 13

9 Profit shifting studies: country estimates Janský and Palanský (2017) on the basis of UNCTAD (2015) Cobham and Janský (2018) on the basis of IMF s Crivelli et al. (2016) Clausing (2016) Cobham and Janský (2017) Petr Janský Profit shifting from lower income countries 9 / 13

10 Petr Janský Profit shifting from lower income countries 10 / 13

11 Results summary Country estimates vary substantially by methodology Tax gaps are substantial for some countries Higher for lower income countries Petr Janský Profit shifting from lower income countries 11 / 13

12 Profit shifting from lower income countries Contact: Petr Janský Independent consultant and Charles University, Prague Petr Janský Profit shifting from lower income countries 12 / 13

13 Clausing, K. A. December The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond. National Tax Journal, 69(4): Cobham, A. and Janský, P Global distribution of revenue loss from tax avoidance. WIDER Working Paper Series, 2017/55. Cobham, A. and Janský, P Global distribution of revenue loss from tax avoidance. Journal of International Development, Forthcoming. Crivelli, E., De Mooij, R., and Keen, M Base erosion, profit shifting and developing countries. FinanzArchiv: Public Finance Analysis, 72(3): Janský, P. and Palanský, M Estimating the Scale of Corporate Profit Shifting: Tax Revenue Losses Related to Foreign Direct Investment. Mimeo. UNCTAD. World Investment Report Reforming International Investment Governance. United Nations Conference on Trade and Development, New York, USA and Geneva, Switzerland, Petr Janský Profit shifting from lower income countries 13 / 13