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Did tax treaties restrain the profit shifting of Chinese multinationals?

Author

Listed:
  • Mantian Xue

    (Southeast University)

  • Yuwei Zhang

    (Southeast University)

Abstract

The Chinese government has been worrying about the outflow of profit of the multinational corporations. Using data from various sources, this paper evaluates the inhibitory effect of bilateral tax treaties on profit shifting behavior of Chinese multinationals. The paper finds strong evidence for profit shifting out of China due to corporate tax differences, as well as statistically significant inhibitory effect of tax treaties. Besides, the profit shifting activities mainly exist in non-manufacturing industries.

Suggested Citation

  • Mantian Xue & Yuwei Zhang, 2024. "Did tax treaties restrain the profit shifting of Chinese multinationals?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 1151-1165, August.
    • Handle: RePEc:spr:weltar:v:160:y:2024:i:3:d:10.1007_s10290-024-00526-8
    DOI: 10.1007/s10290-024-00526-8
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    More about this item

    Keywords

    Tax treaty; Profit shifting; Chinese multinational;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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