Funded by the DATA:RESEARCH:AUSTRIA funding program of the Austrian Academy of Science (Österreichische Akademie der Wissenschaften, OeAW)

Project Title:

Cross-border Income Shifting of Multinational Corporations: Measurement, Countermeasures, and Real-Economic Effects

Project Description:

The project investigates cross-border income shifting by multinational firms, the effectiveness of legislative counter measures, and potential real-economic effects. Despite the societal implications of cross-border income shifting and the far-reaching reform agenda of the OECD, we still lack consensus about the extent to which multinational firms shift income across borders and the associated loss in tax revenue. Aside from the magnitude of income shifted, the suitability of widely used data sources for identifying and measuring income shifting, the effectiveness of legislative countermeasures, and the associated real-economic effects are not well understood. Gaining greater insights along these dimensions is crucial for effective policy-making and informative for future research.

The project addresses three research areas to provide a comprehensive analysis of cross-border income shifting. First, the project aims at providing an estimate of cross-border income shifting and assessing the suitability of commonly used accounting data sources for identifying and quantifying the phenomenon. Second, the project aims at examining the effectiveness of anti-abuse provisions in curbing income shifting and shedding light on firms’ responses. Third, the project aims at identifying real-economic effects of income shifting and assessing how anti-abuse provisions interact with investment decisions.

The research questions are addressed primarily through empirical research methods using confidential corporate tax-return data provided by the Austrian Micro Data Center (AMDC) over the period 2005-2019. The dataset is identified at the entity-year level and includes information on tax-return items, such as taxable income, tax-exempt income, disallowed deductions, etc. The dataset is matched with publicly available financial statement data collected from Bureau van Dijk’s Orbis database. The final dataset is unique, combining confidential tax-return data with publicly available financial statement data. In line with the FAIR principle, all code will be made publicly available.  

Team Members:

Harald Amberger

Ruby Doeleman

Stefanie Pendl