A Comparison of the Tax‐Motivated Income Shifting of Multinationals in Territorial and Worldwide Countries1. (23rd July 2015)

• Record Type: Journal Article
• Authors: Markle, Kevin
• Is Part Of: Contemporary accounting research. Volume 33:Number 1(2016:Sep.)
• Page Start: 7
• Page End: 43
• Publication Date: 2015-07-23
• Subjects: Accounting -- Research -- Periodicals; Accounting -- Canada -- Periodicals; 657
• DOI: 10.1111/1911-3846.12148
• Languages: English
• ISSNs: 0823-9150

Abstract

Abstract: This paper tests for differences in the tax‐motivated income‐shifting behaviors of multinationals subject to different systems of taxing foreign earnings. I find that, on average, multinationals subject to territorial tax regimes shift more income than those subject to worldwide tax regimes. The difference in shifting, however, is driven by a difference in the subset of shifting that involves the parent country; multinationals in the two groups appear to shift equally among their foreign affiliates. In additional tests, I find that the shifting of worldwide firms is sensitive to reinvestment in the recipient countries, while that of territorial firms is not.