How Large is the Corporate Tax Base Erosion and Profit Shifting? A General Equlibrium Approach

Arbeitspapier

This paper estimates the size and macroeconomic effects of base erosion and profit shifting (BEPS) using a computable general equilibrium model designed for corporate taxation and multinationals. Our central estimate of the impact of BEPS on corporate tax losses for the EU amounts to €36 billion annually or 7.7% of total corporate tax revenues. The USA and Japan also appear to loose tax revenues respectively of €101 and €24 billion per year or 10.7% of corporate tax revenues in both cases. These estimates are consistent with gaps in bilateral multinationals´ activities reported by creditor and debtor countries using official statistics for the EU. Our results suggest that by increasing the cost of capital, eliminating profit shifting would slightly reduce investment and GDP. It would however raise corporate tax revenues thanks to enhanced domestic production. This in turn could reduce other taxes and increase welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6870

Classification and Topics

• Classification: Wirtschaft ; Computable General Equilibrium Models ; Fiscal Policy ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; International Fiscal Issues; International Public Goods
• Subject: BEPS ; corporate taxation ; profit shifting ; tax avoidance ; CGE model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alvarez-Martínez, María T. ; Barrios, Salvador ; d'Andria, Diego ; Gesualdo, Maria ; Nicodème, Gaëtan ; Pycroft, Jonathan
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/174993
• Last update: 10.03.2025, 11:44 AM CET