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Base Erosion, Profit Shifting, and Tax Revenue Nexus: Empirical Evidence in Southeast Asian Countries

In: Recent Developments in Vietnamese Business and Finance

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  • Trung Kien Tran

Abstract

This chapter estimates the effect of base erosion and profit shifting (BEPS) related to foreign direct investments (FDIs) on tax revenue losses in Southeast Asian countries. ASEAN members are mainly developing countries that have few experiences in aggressive tax planning of multinational enterprises (MNEs). Particularly, this chapter measures BEPS by the offshore indicator. The Offshore Investment Matrix approach shows that 3.6% of the total inward FDI stock of six Southeast Asian countries comes from offshore investment hubs. Then, this indicator is used as an input to estimate empirically the impact of the share of FDI from tax havens to the rate of return on FDI in ASEAN countries. Finally, a compatible stimulation evaluates the tax revenue losses from BEPS. The result implies the stimulated after-tax profit shifting is about $95.55 billion, which indicates tax revenue losses of $18.56 billion for Southeast Asian countries.

Suggested Citation

  • Trung Kien Tran, 2021. "Base Erosion, Profit Shifting, and Tax Revenue Nexus: Empirical Evidence in Southeast Asian Countries," World Scientific Book Chapters, in: Dong Phong Nguyen & Xuan Vinh Vo & Viet Tien Ho & Mai Dong Tran (ed.), Recent Developments in Vietnamese Business and Finance, chapter 2, pages 27-42, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811227158_0002
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    Keywords

    Vietnam; Business; Finance; Economy; Economics; Banking; Gender Equality; Management; Business Research;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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