Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms
AbstractIn this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones. 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.
CitationBilicka, Katarzyna Anna. 2019. "Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms." American Economic Review, 109 (8): 2921-53. DOI: 10.1257/aer.20180496
- F23 Multinational Firms; International Business
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H32 Fiscal Policies and Behavior of Economic Agents: Firm
- L25 Firm Performance: Size, Diversification, and Scope