TheLongWayto TaxTransparency: Lessonsfromthe EarlyPublishersof Country-by-Country Reports June2023

When quantifying MNEs’ general presence in tax havens, we focus on foreign affiliates’ profits in tax havens to avoid a potential bias introduced by profits in tax haven headquarters.10 We compare the computed shares to the average share of foreign affiliates’ profits in tax havens in the aggregate CbCR data published by the OECD. [...] Figure 4: Share of profits in tax havens The figure plots the share of foreign affiliates’ tax haven profits in total profit for the 10 biggest groups and weighted means for the whole sample and a sub-sample of non-extractive groups. [...] Figure 6: Misalignment of profit and economic activity in tax havens by MNE Note: The figure shows to what extent aggregate profits reported in tax havens are misaligned with aggregate economic activity in terms of the number of employees and the value of tangible assets. [...] The bubble size varies with the absolute amount of profits which the sample MNEs report in each jurisdiction, where the biggest bubbles indicate the top quartile and the smallest bubble the bottom quartile of the distribution of sample profits across countries. [...] Our results would imply that the tax difference of 9 percentage points between Luxembourg and Austria explains a more important share of the distribution of profits between these two countries than the tax difference between Austria and the UK explains of the distribution of profits between the Austria and the UK.