{
  "title": "An Assessment of Global Formula Apportionment",
  "publication": "IMF Working Papers, October 11, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718",
  "overlayPath": "/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/index.md",
  "summary": "Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Ruud A. de Mooij, Li Liu, Dinar Prihardini\n- Publication date: October 11, 2019\n- Paper type: IMF Working Papers\n- Core topic: Formula apportionment as an alternative to the current international tax regime based on separate accounting for attributing taxable profits of multinationals across jurisdictions.\n- Pages: 41\n- Volume: 2019\n- Issue: 213\n- Series: Working Paper No. 2019/213\n- DOI: https://doi.org/10.5089/9781513516257.001\n- Stock No: WPIEA2019213\n- ISBN: 9781513516257\n- ISSN: 1018-5941"
    },
    {
      "heading": "Analytical approach and datasets",
      "content": "- Reviews existing literature and discusses experiences in selective federal states to evaluate economic properties of formula apportionment relative to separate accounting.\n- Analysis exploits different datasets to assess direct revenue implications for individual countries under alternative apportionment formulas.\n- Keywords and subject coverage include: Corporate income tax, Employment, Formula apportionment, Labor, National accounts, Personal income, Revenue administration, Taxes, company group, company transaction, data from ORBIS, enterprise tax, Europe, Global, International corporate taxation, Multinationals, non-loss-making company, parent company, revenue effect, tax competition, tax enforcement, taxable income, WP."
    },
    {
      "heading": "Key findings",
      "content": "- Formula apportionment eliminates profit shifting within multinational groups.\n- Formula apportionment introduces new distortions and affects tax competition.\n- Distributional effects across countries are large, reflecting major discrepancies between:\n  - where profits are currently attributed, and\n  - where factors of production are located or sales take place.\n- The largest revenue losses appear in investment hubs (defined as countries with a disproportionate ratio of foreign direct investment to GDP).\n- Several large advanced countries are likely to gain under formula apportionment.\n- Developing countries:\n  - Gain most likely if employment receives a large weight in the formula.\n  - Tend to benefit, on average, from a formula based on sales by destination."
    },
    {
      "heading": "Policy implications and considerations",
      "content": "- Trade-offs:\n  - Benefit: elimination of within-group profit shifting.\n  - Cost: emergence of new distortions and changed dynamics of tax competition.\n- Design choices matter materially for revenue distribution:\n  - Weighting employment heavily favors developing countries.\n  - Weighting sales by destination tends to benefit developing countries on average.\n- Revenue implications are country-specific and depend on the chosen formula and underlying factor distributions (production location, employment, sales, foreign direct investment patterns).\n\nAn Assessment of Global Formula Apportionment — Ruud A. de Mooij, Li Liu, Dinar Prihardini; IMF Working Paper No. 2019/213; October 11, 2019; Pages: 41; DOI: https://doi.org/10.5089/9781513516257.001\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/bundle-manifest.json)",
    "Authors: Ruud A. de Mooij, Li Liu, Dinar Prihardini",
    "Published: October 11, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513516257.001",
    "Authors: Ruud A. de Mooij, Li Liu, Dinar Prihardini",
    "Publication date: October 11, 2019",
    "Paper type: IMF Working Papers",
    "Core topic: Formula apportionment as an alternative to the current international tax regime based on separate accounting for attributing taxable profits of multinationals across jurisdictions.",
    "Pages: 41",
    "Volume: 2019",
    "Issue: 213",
    "Series: Working Paper No. 2019/213",
    "DOI: https://doi.org/10.5089/9781513516257.001",
    "Stock No: WPIEA2019213",
    "ISBN: 9781513516257",
    "ISSN: 1018-5941",
    "Reviews existing literature and discusses experiences in selective federal states to evaluate economic properties of formula apportionment relative to separate accounting.",
    "Analysis exploits different datasets to assess direct revenue implications for individual countries under alternative apportionment formulas.",
    "Keywords and subject coverage include: Corporate income tax, Employment, Formula apportionment, Labor, National accounts, Personal income, Revenue administration, Taxes, company group, company transaction, data from ORBIS, enterprise tax, Europe, Global, International corporate taxation, Multinationals, non-loss-making company, parent company, revenue effect, tax competition, tax enforcement, taxable income, WP.",
    "Formula apportionment eliminates profit shifting within multinational groups.",
    "Formula apportionment introduces new distortions and affects tax competition.",
    "Distributional effects across countries are large, reflecting major discrepancies between:",
    "The largest revenue losses appear in investment hubs (defined as countries with a disproportionate ratio of foreign direct investment to GDP).",
    "Several large advanced countries are likely to gain under formula apportionment.",
    "Developing countries:",
    "Trade-offs:",
    "Design choices matter materially for revenue distribution:",
    "Revenue implications are country-specific and depend on the chosen formula and underlying factor distributions (production location, employment, sales, foreign direct investment patterns).",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019213-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2019/wpiea2019213-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2019/wpiea2019213-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/index.md",
    "json": "/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/index.json",
    "bundleManifest": "/en/publications/wp/issues/2019/10/11/an-assessment-of-global-formula-apportionment-48718/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T15:54:52.531Z"
}