Tax income differences between multinational and domestic corporations in Norway : a panel data approach

In this paper regression analysis is used to investigate negative profitability differential between foreign and domestic companies in Norway. More years and industries are included in the sample compared to previous studies on Norwegian data. Panel data methods, allowing to get rid of get rid of unobserved heterogeneity across the firms, are applied, in addition to OLS used in most of the earlier literature. More accurate and detailed classification of firms into different foreignness categories is conducted that allows to "refine" control group used for comparisons. The results indicate that multinational firms report around 30% lower profitability than comparable domestic firms. It has also been shown that profitability of domestic firms goes down by about 20% when they become multinational. This is after the most important characteristics and permanent differences between these two types of firms have been controlled for. The estimates of the profitability differential has been shown to be robust to different estimations methods used, as well as different definitions of foreignness and profitability measures. The differential found is consistent with profit shifting behavior by multinational companies in Norway, and would imply that profits are shifted out of Norway. The evidence provided cannot serve a direct proof of profit-shifting activities by multinational firms in Norway, but it strongly suggests that further research is warranted in order to get a better understanding of the problem of profit-shifting

Kunnskapsstatus for hva økonomisk forskning har avdekket om flernasjonale selskapers internprising i Norge

Ved å manipulere prisene på selskapsinterne transaksjoner kan flernasjonale selskaper flytte overskudd fra høyskatteland til lavskatteland. Slik overskuddsflytting kan ha stor innflytelse på selskapsskattebasen til vertslandene. Denne rapporten oppsummerer den kunnskapen akademisk forskning har frembrakt om hvor stort problem flernasjonale selskapers internprising representerer for norske skattemyndigheter. Det er svært få tidligere empiriske studier som bruker norske data. Vi drøfter disse inngående og supplerer litteraturen med omfattende egne analyser. Vi avdekker sammenhenger som er konsistente med overskuddsflytting gjennom manipulering av internpriser. Vi finner at flernasjonale selskaper både flytter overskudd ut av Norge og inn til Norge - alt avhengig av hvilke skattesatser de står overfor i andre land. Vi anslår at nettostrømmen går ut av Norge og at skatteunndragelsen kan være i størrelsesorden 30 prosent av det potensielle skatteprovenyet fra utenlandske flernasjonale foretak. Dette estimatet er svært usikkert, og videre forskning er nødvendig for å bedre kunnskapen på feltet

International Debt Shifting: The Value Maximizing Mix of Internal and External Debt

We study the capital structure of multinationals and expand previous theory by incorporating international debt tax shield effects from both internal and external capital markets. We show that: (i) multinationals' firm value is maximized if both internal and external debt are used to save tax; (ii) the use of internal and external debt is independent of each other; (iii) multinationals have a tax advantage over domestic firms, which cannot shift debt across international borders. We test our model using a large panel of German multinationals and find that internal and external debt shifting are of about equal importance

Kunnskapsstatus for hva økonomisk forskning har avdekket om flernasjonale selskapers internprising i Norge

Ved å manipulere prisene på selskapsinterne transaksjoner kan flernasjonale selskaper flytte overskudd fra høyskatteland til lavskatteland. Slik overskuddsflytting kan ha stor innflytelse på selskapsskattebasen til vertslandene. Denne rapporten oppsummerer den kunnskapen akademisk forskning har frembrakt om hvor stort problem flernasjonale selskapers internprising representerer for norske skattemyndigheter. Det er svært få tidligere empiriske studier som bruker norske data. Vi drøfter disse inngående og supplerer litteraturen med omfattende egne analyser. Vi avdekker sammenhenger som er konsistente med overskuddsflytting gjennom manipulering av internpriser. Vi finner at flernasjonale selskaper både flytter overskudd ut av Norge og inn til Norge - alt avhengig av hvilke skattesatser de står overfor i andre land. Vi anslår at nettostrømmen går ut av Norge og at skatteunndragelsen kan være i størrelsesorden 30 prosent av det potensielle skatteprovenyet fra utenlandske flernasjonale foretak. Dette estimatet er svært usikkert, og videre forskning er nødvendig for å bedre kunnskapen på feltet

International debt shifting : do multinationals shift internal or external debt?

We examine the capital structures of multinational companies. Multinational companies can exploit the tax advantage of debt more aggressively than national companies by shifting debt from affiliates in low-tax countries to affiliates in high-tax countries. Previous papers have omitted either internal debt or external debt from the analysis. We are the first to model the companies’ choice between internal and external debt shifting, and show that it is optimal to use both types of debt in order to save taxes. Using a large panel of German multinationals, we find strong empirical support for our model. The estimated coefficients suggest that internal and external debt shifting are of about equal relevance

International Debt Shifting: The Value Maximizing Mix of Internal and External Debt

We study the capital structure of multinationals and expand previous theory by incorporating international debt tax shield effects from both internal and external capital markets. We show that: (i) multinationals' firm value is maximized if both internal and external debt are used to save tax; (ii) the use of internal and external debt is independent of each other; (iii) multinationals have a tax advantage over domestic firms, which cannot shift debt across international borders. We test our model using a large panel of German multinationals and find that internal and external debt shifting are of about equal importance

Effects of climate and atmospheric nitrogen deposition on early to mid-term stage litter decomposition across biomes

International audienceLitter decomposition is a key process for carbon and nutrient cycling in terrestrial ecosystems and is mainly controlled by environmental conditions, substrate quantity and quality as well as microbial community abundance and composition. In particular, the effects of climate and atmospheric nitrogen (N) deposition on litter decomposition and its temporal dynamics are of significant importance, since their effects might change over the course of the decomposition process. Within the TeaComposition initiative, we incubated Green and Rooibos teas at 524 sites across nine biomes. We assessed how macroclimate and atmospheric inorganic N deposition under current and predicted scenarios (RCP 2.6, RCP 8.5) might affect litter mass loss measured after 3 and 12 months. Our study shows that the early to mid-term mass loss at the global scale was affected predominantly by litter quality (explaining 73% and 62% of the total variance after 3 and 12 months, respectively) followed by climate and N deposition. The effects of climate were not litter-specific and became increasingly significant as decomposition progressed, with MAP explaining 2% and MAT 4% of the variation after 12 months of incubation. The effect of N deposition was litter-specific, and significant only for 12-month decomposition of Rooibos tea at the global scale. However, in the temperate biome where atmospheric N deposition rates are relatively high, the 12-month mass loss of Green and Rooibos teas decreased significantly with increasing N deposition, explaining 9.5% and 1.1% of the variance, respectively. The expected changes in macroclimate and N deposition at the global scale by the end of this century are estimated to increase the 12-month mass loss of easily decomposable litter by 1.1– 3.5% and of the more stable substrates by 3.8–10.6%, relative to current mass loss. In contrast, expected changes in atmospheric N deposition will decrease the mid-term mass loss of high-quality litter by 1.4–2.2% and that of low-quality litter by 0.9–1.5% in the temperate biome. Our results suggest that projected increases in N deposition may have the capacity to dampen the climate-driven increases in litter decomposition depending on the biome and decomposition stage of substrate

Early stage litter decomposition across biomes

Through litter decomposition enormous amounts of carbon is emitted to the atmosphere. Numerous large-scale decomposition experiments have been conducted focusing on this fundamental soil process in order to understand the controls on the terrestrial carbon transfer to the atmosphere. However, previous studies were mostly based on site-specific litter and methodologies, adding major uncertainty to syntheses, comparisons and meta-analyses across different experiments and sites. In the TeaComposition initiative, the potential litter decomposition is investigated by using standardized substrates (Rooibos and Green tea) for comparison of litter mass loss at 336 sites (ranging from −9 to +26 °C MAT and from 60 to 3113 mm MAP) across different ecosystems. In this study we tested the effect of climate (temperature and moisture), litter type and land-use on early stage decomposition (3 months) across nine biomes. We show that litter quality was the predominant controlling factor in early stage litter decomposition, which explained about 65% of the variability in litter decomposition at a global scale. The effect of climate, on the other hand, was not litter specific and explained <0.5% of the variation for Green tea and 5% for Rooibos tea, and was of significance only under unfavorable decomposition conditions (i.e. xeric versus mesic environments). When the data were aggregated at the biome scale, climate played a significant role on decomposition of both litter types (explaining 64% of the variation for Green tea and 72% for Rooibos tea). No significant effect of land-use on early stage litter decomposition was noted within the temperate biome. Our results indicate that multiple drivers are affecting early stage litter mass loss with litter quality being dominant. In order to be able to quantify the relative importance of the different drivers over time, long-term studies combined with experimental trials are needed.This work was performed within the TeaComposition initiative, carried out by 190 institutions worldwide. We thank Gabrielle Drozdowski for her help with the packaging and shipping of tea, Zora Wessely and Johannes Spiegel for the creative implementation of the acknowledgement card, Josip Dusper for creative implementation of the graphical abstract, Christine Brendle for the GIS editing, and Marianne Debue for her help with the data cleaning. Further acknowledgements go to Adriana Principe, Melanie Köbel, Pedro Pinho, Thomas Parker, Steve Unger, Jon Gewirtzman and Margot McKleeven for the implementation of the study at their respective sites. We are very grateful to UNILEVER for sponsoring the Lipton tea bags and to the COST action ClimMani for scientific discussions, adoption and support to the idea of TeaComposition as a common metric. The initiative was supported by the following grants: ILTER Initiative Grant, ClimMani Short-Term Scientific Missions Grant (COST action ES1308; COST-STSM-ES1308-36004; COST-STM-ES1308-39006; ES1308-231015-068365), INTERACT (EU H2020 Grant No. 730938), and Austrian Environment Agency (UBA). Franz Zehetner acknowledges the support granted by the Prometeo Project of Ecuador's Secretariat of Higher Education, Science, Technology and Innovation (SENESCYT) as well as Charles Darwin Foundation for the Galapagos Islands (2190). Ana I. Sousa, Ana I. Lillebø and Marta Lopes thanks for the financial support to CESAM (UID/AMB/50017), to FCT/MEC through national funds (PIDDAC), and the co-funding by the FEDER, within the PT2020 Partnership Agreement and Compete 2020. The research was also funded by the Portuguese Foundation for Science and Technology, FCT, through SFRH/BPD/107823/2015 (A.I. Sousa), co-funded by POPH/FSE. Thomas Mozdzer thanks US National Science Foundation NSF DEB-1557009. Helena C. Serrano thanks Fundação para a Ciência e Tecnologia (UID/BIA/00329/2013). Milan Barna acknowledges Scientific Grant Agency VEGA (2/0101/18). Anzar A Khuroo acknowledges financial support under HIMADRI project from SAC-ISRO, India