Why Pay More? Corporate Tax Avoidance Through Transfer Pricing in OECD Countries
22 Pages Posted: 7 Feb 2001
Date Written: August 2000
This paper presents evidence of profit shifting in response to differences in corporate tax rates for a large selection of OECD countries. In our estimates we control for the effects of tax rate changes on real activity. Our baseline estimates suggest that, on average, a unilateral increase in the corporate tax rate does not lead to an increase in corporate tax revenues owing to a more than offsetting decline in reported profits.
Keywords: Profit shifting, transfer pricing, corporate tax rates, STAN database
JEL Classification: F2, H2
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