The Challenge of Taxing Multinational Firms

In recent years, governments around the world have introduced a range of policies aimed at taxing multinational firms more effectively. These include digital services taxes, stricter anti–profit shifting rules, new transparency requirements, and most prominently the global minimum tax. Together, these reforms reflect growing concerns that corporate profits are highly mobile and can often be shifted across jurisdictions, making them difficult to tax.

This ZEW Lecture on Economic Policy will discuss why taxing multinational firms remains a persistent challenge for tax policy. Drawing on recent research, the speaker examines how firms respond to recent policy initiatives, in particular digital services taxes and transparency measures such as country-by-country reporting. The speaker also analyzes how patterns of profit shifting have evolved in response to these policies and whether they have succeeded in limiting tax avoidance. The lecture concludes by discussing what these findings imply for the design of (corporate) tax systems.