We present a new model of tax-induced transfer pricing as an alternative to the oft-used concealment model. Inspired by interviews with practitioners, we consider a large multinational ?firm which is audited by the tax authority in the high-tax location. When this country adjusts the transfer...

We sketch a model according to which tax havens attract corporate income generated in corrupted countries. We consider the choice of optimal bribes by corrupt o¢ cials and the share of the proceeds of corruption that will be concealed in tax havens. In our framework, tax havens have two...

Previous literature shows that income taxation especially affects the behaviour of business owners and entrepreneurs. However, it is still unclear how much of the response is due to changes in effort and other real economic activity, and how much is due to tax avoidance and tax evasion. This is...

Using consolidated firm-level accounting data for about 3,400 companies in 15 OECD countries from ORBIS (2003-2007), this paper compares the tax burden of companies headquartered in worldwide countries with that of companies headquar- tered in territorial countries. The tax burden is measured by...

We examine whether Delaware serves as a domestic tax haven. We find that taxes play an important role in determining whether U.S. firms locate subsidiaries in Delaware and that these tax factors are economically important when compared to the legal and governance factors considered in prior...

This paper assesses the impact of corporate taxation on multinational activity. A numerically solvable general equilibrium model of trade and multinational firms is used to incorporate the following components of corporate taxation: parent and host country statutory corporate tax rates,...

This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm’s capital stock. Extensive...

framework that covers both greenfield and acquisition investment, and a general constraint linking investment at home and abroad for the multinational by introducing a cost of adjustment for the mobile factor. Unless the cost of adjustment is zero, the domestic tax on foreign-source income...

Advance pricing agreements (APAs) determine transfer prices for intrafi?rm transactions in advance. This paper interprets these contracts as a means to overcome a hold-up problem that occurs because governments cannot commit to non-excessive future tax rates. In addition, with private...

Exploiting a large panel with an exhaustive coverage of cross-border acquisitions across more than 30 countries over more than a decade, this paper provides a comprehensive view of the eect of taxation on the desire of multinational enterprises to invest abroad. By considering the dierences...