REPORTS & COLUMNS
World Investment Report 2022: International Tax Reforms and Sustainable Investment
📙 Co-author of Chapter 3 “The impact of a global minimum tax on FDI”
In recognition of the important role of foreign direct investment (FDI) for development, the role of tax as an FDI determinant, and the extensive use of tax policies to attract FDI, this chapter aims to investigate more fully the impact of the introduction of a global minimum tax on investment and investment policies. It does so with a particular focus on developing countries, not only as tax collectors but also, and especially, as investment recipients. The objective of this chapter is not to question the proposed solutions but rather to analyze their impact on FDI and their implications for investment policy. The aim is to help investment policymakers, and especially those from developing countries, to identify the most effective investment policy responses.
Taxation of Multinationals: Design and Quantification
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
📃 Focus du Conseil d'Analyse Économique, 2021, 64
Minimum corporate taxation constitutes the second Pillar of international corporate tax reforms. It is a simple and powerful tool that could curb profit shifting toward low- or no-tax jurisdictions. Its implementation would allow France to tax the profits that French headquarters have shifted to tax havens and to reduce the erosion of its tax base. We estimate that corporate income tax (CIT) revenues in France would increase by almost €6 billion in the short run after the implementation of an effective minimum tax rate of 15 percent (€8 billion for a rate of 21 percent). 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. Furthermore, the gains induced by the second Pillar are substantially larger than those generated by the first Pillar 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, the first Pillar would bring in about €900 million for France.
International Corporate Taxation After Covid-19: Minimum Taxation as the New Normal
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
📃 CEPII Policy Brief, 2020, 30
Dissemination: Ökonomenstimme
There are lessons to be learned from the 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.
Minimum Effective Tax Rate on Global Multinational Profits
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
National healthcare and other public services, currently under increasing pressure due to the COVID-19 pandemic, have been underfunded in many countries, an issue that has likely been exacerbated by corporate tax avoidance. Some multinationals that have been avoiding corporate taxes for years are about to be bailed out by national governments, arousing a public sentiment of unfairness. This column argues that setting a minimum effective tax rate on the global profit of multinational companies would tackle these concerns.
Une taxation minimale des multinationales pour enrayer l'évitement fiscal
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
(with S. Laffitte, J. Martin, M. Parenti, and F. Toubal)
In this column (available only in French), we argue that anti profit shifting measures would not only link the tax contribution of multinational enterprises to their real economic activity but also increase tax revenues. In the event of a major crisis (e.g., pandemic), such measures would make future rescue plans of governments more acceptable.
How Import Competition Contributes to Corporate Tax Avoidance
📋 Duke University School of Law FinReg Blog, 2020
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. 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 better articulate international trade and tax policies at the international level.
Profit Shifting in France: Evidence from Firm‐level Administrative Databases
(with S. Laffitte, M. Parenti, and F. Toubal)
(with S. Laffitte, M. Parenti, and F. Toubal)
📃 Focus du Conseil d'Analyse Économique, 2019, 36
Using French administrative databases, 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)
(with S. Delpeuch, S. Laffitte, M. Parenti, H. Paris, and F. Toubal)
📃 Focus du Conseil d'Analyse Économique, 2019, 38
In this report (available only in French), we present the French Country‐by‐Country Reporting (CbCR) database and compare it with the information contained in the French administrative database (FARE). We observe some discrepancies between the two sources and show that the informational content of the CbCR data is actually limited due to the design of the CbCR requirements. We propose to harmonize and improve these requirements to make CbCR data more informative and useful for both researchers and tax authorities.
