Tax Policy in Multinational Firms
On Thursday 26 June 2025 Henrik Svensli will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.
This thesis consists of three chapters that examine multinational companies (MNCs) and their tax policy. Each chapter studies the impact of different profit shifting strategies used by MNCs, namely the use of tax havens, international debt shifting and transfer pricing.
The first chapter establishes a decreasing effect of tax haven activities on the effective tax burden of MNCs. The results suggest that the effect is isolated to large firms. The candidiate finds that a one percentage point increase in tax haven activities reduces the tax burden by 3.32 percentage points among large firms relative to smaller firms. He also provides an instrumental variable estimate exploiting the 2014 Luxembourg Leaks and show that firms affected by the leak experienced a significant reduction in the effective tax burden.
The second chapter studies international debt shifting in MNCs. Svensli finds that the capital structure of firms, the amount of debt and equity, is tax sensitive and that firms shift both external and internal debt between affiliates in different countries. They also calculate the revenue effects of international debt shifting and find that the tax gap increases with corporate tax rates and that the countries with the highest tax rates in the OECD lose 2.5 % of their MNC corporate income tax revenue.
The third chapter studies how an MNC operating as a two-sided platform and its choice to centralize or decentralize its decision structure affects profit-shifting incentives under a destination-based cash-flow tax (DBCFT). He shows that under both centralized and decentralized decision structures, and when the DBCFT is universally adopted by all countries, the incentives for profit shifting are eliminated.
For a decentralized MNC, Svensli shows that international tax rate differentials only play a role when the exporting country unilaterally adopts the DBCFT. For a centralized MNC, if a single country unilaterally adopts the DBCFT, profits are shifted to the adopting country.
Prescribed topic for the trial lecture:
"A Global Minimum Tax: The End of the Race to the Bottom?"
Trial lecture:
Jebsen Centre, NHH
Title of the thesis:
«Essays on multinational firm behavior».
Defense:
Jebsen Centre, NHH
Members of the evaluation committee:
Associate Professor Floris Zoutman (leader of the committee), Department of Business and Management Science, NHH
Associate Professor Andrea Schneider, Jönköping International Business School
Professor Marko Köthenbürger, ETH Zurich
Supervisors:
Professor Guttorm Schjeldrup (main supervisor), Department of Business and Management Science, NHH
Professor Jarle Møen, Department of Business and Management Science, NHH
Professor Arnt Ove Hopland and Professor Mohammed Mardan, Department of Business and Management Science, NHH
The trial lecture and thesis defense will be open to the public.