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MNE Business Functions and Corporate Taxation

Author

Listed:
  • Samuel Delpeuch
  • Ana Cinta González Cabral
  • Felix Hugger
  • Pierce O’Reilly

Abstract

This paper examines real responses of large multinational enterprises (MNEs) to tax by studying the global allocation of their business functions such as manufacturing and sales or financial and holding functions. Drawing on a novel dataset , the study explores the relationship between the location of such business functions and effective corporate taxation. The findings indicate that higher average effective tax rates are associated with a lower prevalence of functions related to holding or the provision of internal group finance. In contrast, more routine functions, such as sales or manufacturing appear less sensitive to average effective tax rates. Finally, business functions also respond to a variety of other features of CIT systems, such as tax incentives, loss carryover provisions, or anti-avoidance rules. The results offer valuable insights into the structure of MNEs global value chains, as well as the real economic impacts of corporate taxation.

Suggested Citation

  • Samuel Delpeuch & Ana Cinta González Cabral & Felix Hugger & Pierce O’Reilly, 2025. "MNE Business Functions and Corporate Taxation," OECD Taxation Working Papers 71, OECD Publishing.
    • Handle: RePEc:oec:ctpaaa:71-en
    as

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    More about this item

    Keywords

    business functions; company structures; corporate taxation; international taxation; MNE; multinational enterprises;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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