Multinationals and Services Imports from Havens: When Policies Stand in the Way of Tax Planning

We study services imports by multinational groups from tax havens and investigate to what extent those imports may have profit shifting motives. Drawing on rich data covering the universe of multinational groups with a presence in Portugal, we show that despite a high statutory rate of the corporate income tax, in the presence of strict anti-avoidance rules and a patent box regime, multinational groups do not have an excess propensity to import intra-group services from tax havens. For the havens directly targeted by anti-tax planning policies, there is even a negative excess propensity to do so. Moreover, the value of intra-group services imports from most tax havens is not found to be excessive.