This research uses survey data on the international operations of US-headquartered multinational groups
A major international effort – the OECD Base Erosion and Profit Shifting (BEPS) initiative – aims to reduce the extent of misalignment between the profits of multinational groups, and the location of their real economic activity. Recent research using balance sheet data has shown major misalignments, with a number of small jurisdictions capturing a tax base disproportionate to their economic activity, but has also revealed the limitations of available balance sheet data for lower-income countries. This paper uses survey data on the international operations of US-headquartered multinational groups to expand the research to a broader group of host countries (albeit for only one home economy), and confirms major misalignments of profit. A small number of ‘profit-haven’ jurisdictions are seen to have captured a disproportionate share of total profits, resulting in serious disadvantages for most G20 countries, regardless of income level.
Cobham, A.; Jansky, P. Measuring Misalignment: the Location of US Multinationals Economic Activity Versus the Location of their Profits. ICTD Working Paper 42. Institute of Development Studies (IDS), Brighton, UK (2015) 30 pp. ISBN 978-1-78118-276-5