Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
The Tax Sensitivity of Debt in Multinationals: A Review
Abstract: The OECD in its BEPS action plan 4 addresses tax base
erosion by profit shifting through the use of tax deductible interest
payments. Their main concern is interest deductions between outbound and
inbound investment by groups. Studies of multinational firms show that the
tax sensitivity of debt is more modest than what one would expect given the
incentives for profit shifting. The purpose of this paper is to review
existing literature and to add new knowledge on multinational firm behavior
that pertains to the use of debt.
Keywords: Corporate taxation; multinationals; capital structure; international debt-shifting; tax avoidance; (follow links to similar papers)
JEL-Codes: F23; G32; H25; (follow links to similar papers)
16 pages, October 30, 2015
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