The Impact of Headquarter and Subsidiary Locations on Multinationals' Effective Tax Rates

35 Pages Posted: 9 Nov 2013

See all articles by Kevin Markle

Kevin Markle

University of Iowa - Henry B. Tippie College of Business

Douglas A. Shackelford

University of North Carolina Kenan-Flagler Business School; National Bureau of Economic Research (NBER)

Date Written: November 2013

Abstract

We examine effective tax rates (ETRs) for 9,022 multinationals from 87 countries from 2006 to 2011. We find that, despite extensive investments in international tax avoidance, multinationals headquartered in Japan, the U.S., and some high-tax European countries continue to face substantially higher worldwide taxes than their counterparts in havens and other less heavily taxed locations. Other findings include: (a) Effective tax rates remained steady over the investigation period; (b) Entering a tax haven country for the first time results in a slight reduction in the firm's ETR; (c) ETR changes vary depending on whether the subsidiary is a financial conduit or an operating subsidiary. These results should aid ongoing international tax policy debates and expand scholars' understanding about the taxation of multinationals.

Suggested Citation

Markle, Kevin and Shackelford, Douglas A., The Impact of Headquarter and Subsidiary Locations on Multinationals' Effective Tax Rates (November 2013). NBER Working Paper No. w19621. Available at SSRN: https://ssrn.com/abstract=2352138

Kevin Markle (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

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Douglas A. Shackelford

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
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919-962-4727 (Fax)

National Bureau of Economic Research (NBER)

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