TY - BOOK ID - 133610415 TI - The Impact of Profit Shifting on Economic Activity and Tax Competition AU - Klemm, Alexander. AU - Liu, Li. PY - 2019 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Public Finance KW - Taxation KW - Corporate Taxation KW - Taxation, Subsidies, and Revenue: General KW - Business Taxes and Subsidies KW - Public finance & taxation KW - Corporate & business tax KW - Thin capitalization rules KW - Transfer pricing rules KW - Corporate income tax KW - Anti-avoidance rules KW - Revenue administration KW - Taxes KW - Double taxation KW - Corporations KW - Revenue KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:133610415 AB - A growing empirical literature has documented significant profit shifting activities by multinationals. This paper looks at the impact of such profit shifting on real activity and tax competition. Real activity can be affected as profit shifting changes—and theoretically most likely reduces—the cost of capital. Tax competition, even over real capital, is affected, because a permissive attitude toward profit shifting can be seen as a selective tax reduction for multinationals. Tightening profit shifting rules in turn can affect tax competition through the main rate. This paper discusses these issues theoretically and with the help of a simulation to assess the impact of profit-shifting on investment, revenues, and government behavior. Using the theoretical framework, it also provides a brief overview of the related empirical literature. ER -