Charting New Waters: Submarine Cables and the Surge of Multinationals' Activities in Tax Haven Islands

22 Pages Posted: 16 Apr 2024 Last revised: 15 Jun 2024

See all articles by Baptiste Souillard

Baptiste Souillard

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Date Written: April 14, 2024

Abstract

Do information and communication technologies contribute to global tax dodging? This paper examines the impact of the staggered arrival of submarine cables in remote tax havens on US multinationals' activities in these jurisdictions. Difference-indifference estimations show that accounting for systematic differences across firms and jurisdictions, companies were considerably more prone to disclose subsidiaries in a tax haven island after the deployment of submarine cables in that island. Interestingly, the increase in foreign direct investments triggered by the deployment of submarine cables is higher in tax haven islands than in other non-haven islands. Digitalization made tax haven islands relatively more accessible, making it easier for large corporations to move and anchor profits in offshore financial centers.

Keywords: Multinational enterprises, corporate tax avoidance, profit shifting, digitalization, submarine cables, FDI F23, H26, O33

JEL Classification: F23, H26, O33.

Suggested Citation

Souillard, Baptiste, Charting New Waters: Submarine Cables and the Surge of Multinationals' Activities in Tax Haven Islands (April 14, 2024). Available at SSRN: https://ssrn.com/abstract=4793996 or http://dx.doi.org/10.2139/ssrn.4793996

Baptiste Souillard (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

HOME PAGE: http://www.baptistesouillard.com/

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