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Tax Haven Incorporation for U.S. Headquartered Firms: No Exodus Yet

39 Pages Posted: 28 Oct 2011 Last revised: 15 May 2013

Eric J. Allen

University of Southern California - Leventhal School of Accounting

Susan C. Morse

University of Texas at Austin - School of Law

Date Written: December 20, 2012

Abstract

U.S. income tax rules may encourage a U.S.-headquartered multinational corporation (“MNC”) to adopt a tax-haven-parented structure. We study data from firms that conducted initial public offerings in the United States between 1997 and 2010 and offer evidence that U.S.-headquartered MNCs rarely incorporate in tax havens. Of the 918 U.S.-headquartered MNCs that we identify, only 27 are incorporated in tax havens. Others have pointed to the recent increase in the proportion of firms conducting U.S. IPOs that incorporate in tax havens as possible evidence that U.S.-headquartered MNCs increasingly make this decision. We show instead that Chinese-headquartered firms drive this increase. We list the U.S.-headquartered firms that we find have incorporated in tax havens and offer some analysis and ideas for further research.

Keywords: international taxation, initial public offerings, tax havens, headquarters, incorporation

JEL Classification: H25

Suggested Citation

Allen, Eric J. and Morse, Susan C., Tax Haven Incorporation for U.S. Headquartered Firms: No Exodus Yet (December 20, 2012). National Tax Journal, 66, 2013, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1950760 or http://dx.doi.org/10.2139/ssrn.1950760

Eric J. Allen

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States

Susan C. Morse (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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