An FDI-Driven Approach to Measuring the Scale and Economic Impact of BEPs
38 Pages Posted: 4 Jun 2020 Last revised: 17 Aug 2021
Date Written: September 14, 2018
This paper explores the link between foreign direct investment (FDI) and the BEPS (base erosion and profit shifting) practices of multinationals (MNEs). It puts the spotlight on the outsize role of offshore investment hubs as major players in global corporate investment, a role that is largely due to MNEs’ tax planning, although other factors contribute. The paper shows that tax avoidance practices enabled by FDI through offshore hubs are responsible for significant leakage of development financing resources. In policy terms, these findings call for enhanced cooperation and synergies between international tax and investment policymaking.
Keywords: multinational enterprise, BEPS, revenue losses, developing countries, offshore investment
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