“The Missing Profits of Nations,” by Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman is a recent high-profile study seeking to assess profit shifting by multinational corporations. Headlines such as “40 percent of multinational profits are shifted” are at risk of being misinterpreted as indicating potential revenue gains that are higher than their findings suggest.
Should Developing Countries Sign the OECD Multilateral Instrument to Address Treaty-Related Base Erosion and Profit Shifting Measures?
The Multilateral Instrument (MLI) is a groundbreaking mechanism to update the network of thousands of bilateral tax treaties that make up the international tax system. This paper argues that developing countries should sign up to the MLI, but that they can afford to take a wait-and-see approach to selecting and finalizing options, while reviewing the options selected by other countries and building capacity for implementation. Developing countries should also be cautious about entering into new tax treaties to be sure that provisions are in their favour.