The next Economics Seminar of Paris-Saclay will take place on Thursday, September 29 from 12h15 to 13h15. Vincent Vicard (CEPII) will present The complexity of multinational enterprises and tax avoidance (joint with Manon François)

Does the complexity of multinational enterprises’ (MNEs) ownership structure serve tax avoidance? We use cross-country firm-level data to show that affiliates belonging to more complex MNEs are more likely to bunch around zero profit, consistent with complexity enabling tax avoidance by multinational firms. Our results show that only more complex MNEs shift profits away from their high-tax affiliates, while MNEs with flat ownership structures do not display such pattern. Our analysis also shows that affiliates directly held through tax havens are more likely to report zero profit than other affiliates in more complex MNEs.