The Effect of Global Anti-Tax Avoidance Efforts on Sub-National Profit Shifting

This paper examines whether multinational enterprises (MNEs) adapt to international anti–tax avoidance regulation by intensifying domestic profit shifting activities. We compile a novel dataset by mapping MNE ownership network structures that link international to sub-national tax haven subsidiaries over time. Our analyses show that tighter international rules lead more strongly affected firms to intensify their presence in sub-national tax havens, consistent with strong increases in profit tax revenues at these locations. This shift indicates that international tax policies have had bite in constraining cross-border tax avoidance. At the same time, our findings reveal MNEs’ strategic flexibility and highlight domestic spillovers and local consequences of global tax reforms.

Gaul, Johannes und Inga Schulz (2026), The Effect of Global Anti-Tax Avoidance Efforts on Sub-National Profit Shifting, ZEW Discussion Paper Nr. 26-009, Mannheim.