This paper investigates how banks use internal debt to shift profits to lower taxed affiliates. Using regulatory data on German multinational banks I find that banks employ the debt shifting channel more aggressively than non-banks do. This becomes even clearer when I correct for conduit...

This paper analyses if, and to which extent, firms anticipate future tax rate changes. The weight of future tax rates in firms' location decisions may explain differences in the sensitivity of firms' location decision to current tax rates. Firms with high relocation costs, for example, are more...

Using a rich panel data base for firms in Asian countries, we assess the effect of public sector corruption on corporate assets investment and tax payments. Our findings suggest that public sector corruption does not deter investment activities of national firms while asset investment of...

This paper analyzes a two-country model with an international investor considering acquisitions of already existing target firms in a high-tax country and a low-tax country. The investor is able to shift profits from one location to another for tax saving purposes. Two systems of corporate...

Larger firms are more likely to use tax haven operations to exploit international tax differences. We study a tax game between a large country and a tax haven modeling heterogeneous monopolistic firms, which can shift profits abroad. We show that a higher degree of firm heterogeneity (a...

Multinational companies can exploit the tax advantage of debt more aggressively than national companies. Besides utilizing the standard debt tax shield, multinationals can shift debt from affiliates in low-tax countries to affiliates in high-tax countries. We study the capital structure of...

By introducing controlled-foreign-corporation (CFC) rules, the parent country of a multinational firm reserves the right to tax the income of the firm's foreign affiliates, if the tax rate in the affiliate's host country is below a specified threshold. In this paper, we identify the conditions...

This paper examines the flexibility of multinational firms to use income-shifting strategies within a tax year to react to operating losses. First, we develop an analytical model that considers how affiliate losses can be adjusted by using the transfer prices of tangible and intangible assets,...

Corporate tax rates around the world have considerably decreased in the last decades. While tax competition among countries has been widely accepted as the driving force of this trend, it has remained unclear which countries compete with whom. This paper focuses on country size as a determinant...

We analyze the implications of OECD methods to regulate transfer pricing and the role of a royalty tax for abusive transfer pricing. We show: (i) Under traditional methods, mispricing of royalty payments does not affect investment, but the Transactional Profit Split Method triggers higher...