Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms

Authors

Katarzyna Anna Bilicka, Utah State UniversityFollow

Document Type

Article

Journal/Book Title/Conference

American Economic Review

Volume

109

Issue

8

Publisher

American Economic Association

Publication Date

8-2019

First Page

2921

Last Page

2953

Abstract

In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones. The majority of the difference is attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits. I document how the estimated difference is related to profit shifting and show that using accounting data leads to much smaller estimates of the difference.

Recommended Citation

Bilicka, Katarzyna Anna. 2019. "Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms." American Economic Review, 109 (8): 2921-53.