Establishing the Baseline: Estimating the Fiscal Contribution of Multinational Enterprises
Bolwijn R., B. Casella and D. Rigo (2018). 'Establishing the baseline: estimating the fiscal contribution of multinational enterprises'. Transnational Corporations 25 (3).
32 Pages Posted: 22 Jul 2019
Date Written: November 20, 2018
Tax revenues from multinational enterprises (MNEs) are an important source of public finance in developing economies. The research and policy debate so far have mostly focused on the “missing” part, i.e. the government revenues lost due to the tax avoidance practices of MNEs (Bolwijn et al., 2018). In this study, we take a different, but complementary, approach, looking at the taxes and other revenues actually paid by foreign affiliates of MNEs to developing-country governments. We present two alternative methodologies to estimate foreign affiliates’ fiscal contribution – the contribution method and the foreign direct investment (FDI) income method – and show that they lead to the same order of magnitude. The findings allow us to set a baseline for an informed discussion on tax avoidance by MNEs.
Keywords: multinational enterprise, fiscal contribution, BEPS, domestic revenues, developing countries
JEL Classification: F21, F23
Suggested Citation: Suggested Citation