ABSTRACT
We present empirical evidence suggesting that weak tax enforcement proxied by the extent of tax evasion in a country acts like a lower corporate tax rate in attracting profits of multinational corporations.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 Unfortunately, the item ‘irregular payments in tax collection’ from the Global Competitiveness Report delivered by the World Economic Forum is not available for many years and countries. However, we find that there is some consistency between the different data sources using cross sections. For example, we obtain a high pairwise correlation coefficient of 0.91 with our evasion variable using data for the year 2010.