A Review of Empirical Research on Multinational Tax-Motivated Income Shifting

SYNOPSIS The political, academic, and practical significance of corporate tax-motivated income shifting raises important questions related to this complex tax planning strategy: (1) Is income shifting prevalent in our global economy? (2) What firm conditions and characteristics facilitate income shifting? (3) What nontax costs constrain income shifting? (4) What are the unintended consequences of income shifting? In this paper, we integrate 35 years of empirical research on multinational income shifting within the context of the Scholes-Wolfson tax planning framework to evaluate existing evidence addressing these questions. We then connect these findings with practice and policymaking and discuss opportunities for future research. JEL Classifications: H26; M48.