Taxation of Multinationals: Design and Quantification (with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
Dissemination: Financial Times, Agence France Presse, Le Monde, Tax Notes, Les Échos, Le Figaro, Libération, Médiapart, La Tribune, Alternatives Économiques, Atlantico, etc (see a non-exhaustive list here)
Minimum corporate taxation is the second Pillar of the reforms of international corporate taxation. It is a simple and powerful tool that could curb profit shifting towards low or no tax jurisdictions. Its implementation would allow France to tax the profits that French headquarters have shifted to tax havens, but also to reduce the erosion of its tax base. We estimate the French corporate income tax (CIT) revenues would increase by almost 6 billion euros in the short run after the implementation of an effective minimum tax rate of 15% and by 8 billion euros at a rate of 21%. CIT gains may vary substantially depending on the scope of the tax base, the possibility of headquarters’ inversion, and whether it includes domestic corporations or not. CIT gains are relatively higher in France than in Germany or the United States. The expected gains are substantially larger than those to be expected from the implementation of the first Pillar of the reform in its version proposed by the US in April 2021, which opens up rights to tax the 100 largest corporations in the world according to their sales’ destination. According to our estimates, Pillar One would bring in about 900 million euros for France.
International Corporate Taxation After Covid-19: Minimum Taxation as the New Normal (with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
There are lessons to be learned from the current Covid-19 pandemic. This exceptional situation requires rethinking the provision of sound infrastructures and a functioning health system. National healthcare and other public services, which are currently under increasing pressure, have been underfunded in many countries, an issue that corporate tax avoidance has likely exacerbated. Some multinationals that have been avoiding corporate taxes for years are about to be bailed out by national governments, thus arousing a public sentiment of unfairness. In this Policy Brief, we argue that setting a minimum effective tax rate on the global profit of multinational firms would tackle these concerns.
Profit Shifting in France: Evidence from Firm‐level Administrative Databases (with S. Laffitte, M. Parenti, and F. Toubal)
Dissemination: Financial Times, Agence France Presse, Le Monde, Les Échos, L'Express, La Tribune, Le Parisien, Le Figaro, Ouest France, Europe 1, Challenges, La Croix, L'Humanité, Alternatives Économiques, etc (see a non-exhaustive list here)
Using French administrative databases (FARE and LIFI), we estimate that at least €4.6 billion of corporate income taxes are avoided by firms located in France on an annual basis.
Quel Reporting Pays par Pays pour les Futures Réformes ? (with S. Delpeuch, S. Laffitte, M. Parenti, H. Paris, and F. Toubal)
In this report (only available in French), we present the French Country‐by‐Country Reporting (CbCR) database and compare it with the information contained in the administrative database Fare. We observe some discrepancies between these two sources and show that the informational content of the CbCR data is actually limited. We argue that it is due to the design of the CbCR requirements and we propose to harmonize and improve these requirements to make these data more informative and exploitable for both researchers and tax authorities.
Une taxation minimale des multinationales pour enrayer l'évitement fiscal (with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
In this column (available only in French), we argue that measures against profit shifting would have the advantage of both linking the tax contribution of multinational enterprises to their real economic activity and increasing tax revenues. In the event of a major crisis, such as the COVID-19 pandemic, such measures would make future rescue plans of governments more acceptable.
How Import Competition Contributes to Corporate Tax Avoidance
Tax scandals have inevitably had a special resonance in public opinion at a time when societies are struggling with budget deficits, rising inequalities, and a pandemic underlining the importance of public goods. Despite being opaque by nature, tax avoidance strategies are now quite well-known, both by researchers and policymakers. The factors pushing firms to engage in tax avoidance are, however, relatively less understood. This column consists of a non-technical summary of my paper “The indirect effect of import competition on corporate tax avoidance.” In this paper, I show that the China shock prompted multinational companies to invest in intangible assets, thereby facilitating profit shifting activities. The findings carry important policy implications. For example, as they reveal a close relationship between competition, trade, and corporate income taxes, they emphasize the need to connect international trade and tax policies at the international level.