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A study of cross‐border profit shifting channels: Evidence from Australia

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  • Alfred Tran
  • Wanmeng Xu

Abstract

We investigate two cross‐border profit shifting channels used by foreign multinational enterprises (MNEs) in Australia and assess the effectiveness of the related measures adopted by the Australian Parliament to combat base erosion and profit shifting (BEPS). Overall, we find that Australian subsidiaries of foreign MNEs used tax‐induced intra‐group transfer pricing and, to a lesser extent, interest expense loading to shift profit out of Australia throughout the period from 2007 to 2020. However, we find no evidence indicating that profit shifting out of Australia via the two channels has reduced after the implementation of related BEPS countermeasures in Australia from 2013.

Suggested Citation

  • Alfred Tran & Wanmeng Xu, 2024. "A study of cross‐border profit shifting channels: Evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 869-901, March.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:1:p:869-901
    DOI: 10.1111/acfi.13166
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