## Base Erosion, Profit Shifting and Developing Countries

_IMF Working Papers, May 29, 2015_

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**Canonical URL:** [Base Erosion, Profit Shifting and Developing Countries](https://www.imf.org/en/publications/wp/issues/2016/12/31/base-erosion-profit-shifting-and-developing-countries-42973)

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## Bibliographic details
- Authors: Ernesto Crivelli, Ruud A. de Mooij, Michael Keen
- Published: May 29, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513563831.001

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### Overview
- International corporate tax issues are prominent in public debate, notably with the G20-OECD project addressing Base Erosion and Profit Shifting (‘BEPS’).
- While considerable empirical evidence exists for advanced countries on the cross-country fiscal externalities at the heart of these issues, there is almost none for developing countries.
- This paper focuses on developing countries and applies a new method to distinguish between spillover effects through real decisions and through avoidance — and quantify the revenue impact of the latter.

### Methodology
- Data: panel data for 173 countries over 33 years.
- Analytical innovation: a new method to separate spillover effects arising from real decisions from those arising from avoidance (profit shifting), and to quantify the revenue impact of avoidance.

### Key findings
- Spillover effects on the tax base are if anything a greater concern for developing countries than for advanced countries.
- Spillover effects constitute a significant fiscal concern for developing countries.
- The paper quantifies the revenue impact attributable to avoidance/profit shifting (details in the full working paper).

### Policy implications and emphasis
- International corporate tax spillovers (including BEPS-related avoidance) matter materially for developing-country revenues.
- Understanding and addressing both real-decision spillovers and avoidance-driven spillovers is important for tax policy in developing countries.
- The findings underline the relevance of international tax cooperation (as reflected in the G20-OECD BEPS project) for developing-country revenue protection.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/base-erosion-profit-shifting-and-developing-countries-42973_