NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Impact of Headquarter and Subsidiary Locations on Multinationals' Effective Tax Rates

Kevin S. Markle, Douglas A. Shackelford

Chapter in NBER book Tax Policy and the Economy, Volume 28 (2014), Jeffrey R. Brown, editor (p. 33 - 62)
Conference held October 3, 2013
Published in October 2014 by University of Chicago Press
© 2014 by the National Bureau of Economic Research
in NBER Book Series Tax Policy and the Economy

We examine effective tax rates (ETRs) for 9,022 multinationals from 87 countries from 2006 to 2011. We find that, despite extensive investments in international tax avoidance, multinationals headquartered in Japan, the U.S., and some high-tax European countries continue to face substantially higher worldwide taxes than their counterparts in havens and other less heavily taxed locations. Other findings include: (a) Effective tax rates remained steady over the investigation period; (b) Entering a tax haven country for the first time results in a slight reduction in the firm's ETR; (c) ETR changes vary depending on whether the subsidiary is a financial conduit or an operating subsidiary. These results should aid ongoing international tax policy debates and expand scholars' understanding about the taxation of multinationals.

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Document Object Identifier (DOI): 10.1086/675587

This chapter first appeared as NBER working paper w19621, The Impact of Headquarter and Subsidiary Locations on Multinationals' Effective Tax Rates, Kevin S. Markle, Douglas A. Shackelford
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