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Why Pay More? Corporate Tax Avoidance through Transfer Pricing in OECD Countries

By Eric J. Bartelsman and Roel Beetsma

Abstract

This paper presents evidence of profit shifting in response to differences in corporate tax rates for a large selection of OECD countries. In our estimates we control for the effects of tax rate changes on real activity. Our baseline estimates suggest that, on average, a unilateral increase in the corporate tax rate does not lead to an increase in corporate tax revenues owing to a more than offsetting decline in reported profits.Profit shifting, transfer pricing, corporate tax rates, STAN database

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