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

NBER Working Paper No. 19621
Issued in November 2013
NBER Program(s):   PE

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): 10.3386/w19621

Forthcoming: The Impact of Headquarter and Subsidiary Locations on Multinationals’ Effective Tax Rates, Kevin S. Markle, Douglas A. Shackelford. in Tax Policy and the Economy, Volume 28, Brown. 2014

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