Journal Article
The dominant role of large firms in profit shifting

Globally, the largest 0.001 per cent of frms earn one-third of all corporate profts. Nonetheless, there is little understanding of how proft shifting difers across frm size.

Using the universe of South African corporate tax returns and global fnancial accounts, we fnd that proft shifting is concentrated among a few very large frms and that previous micro studies underestimate proft shifting by failing to account for frm size.

This aids to explain the notable gap between micro and macro estimates of proft shifting. We revisit OECD’s micro estimate and fnd that this may underestimate proft shifting by 40 per cent.