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profit shifting Archive

Digital Services Taxes in Europe, 2022

TweetShareSharePin0 Shares Over the last few years, concerns have been raised that the existing international tax system does not properly capture the digitalization of the economy. Under current international tax rules, multinationals generally pay corporate income tax where production occurs rather than where consumers or, specifically for the digital sector, users are located. However, some

Why FDI Matters for US Employment & Wages

TweetShareSharePin0 Shares The Biden administration has offered several proposals to reform the taxation of U.S. multinationals, addressing profit shifting as well as a broader view that offshoring is bad for the U.S. economy and firms should be encouraged to “reshore” as much activity to the United Sates as possible. Contrary to the Biden administration’s claims,

Impact of National Tax Reforms on the EU Economy

TweetShareSharePin0 Shares Note: The following is the testimony of Daniel Bunn, Tax Foundation Vice President of Global Projects, prepared for a EU Parliament Subcommittee on Tax Matters hearing on October 11, 2021, regarding the impact of national tax reforms on the EU economy. Thank you for the opportunity to testify today. My name is Daniel Bunn, and I am

How Would the Ways and Means Proposal Affect Profit Shifting?

TweetShareSharePin0 Shares Recent proposals to increase the effective tax rates (ETRs) faced by multinationals rely on the argument that these firms achieve artificially low tax rates by shifting profits to foreign tax havens and other low-tax countries. By raising the tax rates on the foreign income of U.S. multinationals, these proposals would supposedly reduce profit

Patent Box Regimes in Europe, 2021

TweetShareSharePin0 Shares Patent box regimes (also referred to as intellectual property, or IP, regimes) provide lower effective tax rates on income derived from IP. Most commonly, eligible types of IP are patents and software copyrights. Depending on the patent box regime, income derived from IP can include royalties, licensing fees, gains on the sale of

Comments on the Wyden, Brown, Warner International Tax Overhaul Draft

TweetShareSharePin0 Shares Introduction Tax Foundation welcomes the opportunity to offer comments on the Wyden, Warner, Brown discussion draft on international taxation. Tax Foundation is a nonprofit think tank based in Washington, D.C., and our mission is to improve lives through tax policies that lead to greater economic growth and opportunity. We use the four principles

A Hidden Tax on Domestic Activities & Foreign Profits

TweetShareSharePin11 Shares The U.S. corporate tax code is a complicated behemoth, loaded with numerous arcane provisions—some of these providing special tax breaks, others imposing special tax penalties. Among the latter group, indirect expense allocation rules penalize domestic activities and impose a hidden surtax on foreign profits. While arcane, expense allocation rules are relevant to current

International Tax Proposals and Profit Shifting

TweetShareSharePin0 Shares Profit shifting by multinationals poses a major challenge in international taxation. The ability of multinational enterprises to shift the location of profits from high-tax to low-tax jurisdictions and tax havens erodes the corporate income tax base in high-tax countries. For example, a multinational with patents owned by an Irish affiliate can shift profits

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