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Measuring misalignment: The location of US multinationals’ economic activity versus the location of their profits
Author(s) -
Cobham Alex,
Janský Petr
Publication year - 2019
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/dpr.12315
Subject(s) - multinational corporation , profit (economics) , safe haven , business , base erosion and profit shifting , economics , industrial organization , international trade , international economics , microeconomics , finance , double taxation , tax avoidance
A major international effort—the Organisation for Economic Co‐operation and Development Base Erosion and Profit Shifting initiative—aims to reduce the extent of misalignment between the profits of multinational groups, and the location of their real economic activity. This article uses survey data on the international operations of US ‐headquartered multinational groups to show 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 countries, regardless of income level.