International Profit‐Shifting Out of Developing Countries and the Role of Tax Havens

22 Pages Posted: 2 Apr 2015

See all articles by Petr Jansky

Petr Jansky

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies

Alex Prats

Christian Aid

Date Written: May 2015

Abstract

This article contributes to the debate on how tax avoidance and evasion can hamper development efforts by investigating the link between profit‐shifting out of developing countries and tax havens. Analysis of more than 1500 multinational corporations (MNCs) operating in India shows that in 2010 those MNCs with links to tax havens reported lower profits and paid less in taxes per unit of asset than MNCs with no such links. This confirms the notion that when corporations have links to tax havens they enjoy higher incentives, because of the low tax rates, and opportunities to shift income because of the secrecy provisions tax havens offer.

Keywords: Profit‐shifting, multinational corporations, developing countries, tax havens, India

Suggested Citation

Jansky, Petr and Prats, Alex, International Profit‐Shifting Out of Developing Countries and the Role of Tax Havens (May 2015). Development Policy Review, Vol. 33, Issue 3, pp. 271-292, 2015, Available at SSRN: https://ssrn.com/abstract=2588771 or http://dx.doi.org/10.1111/dpr.12113

Petr Jansky (Contact Author)

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/en/staff/jansky

Alex Prats

Christian Aid ( email )

United Kingdom

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