Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property / Rishi Sharma, Joel Slemrod, Michael Stimmelmayr.

Format:

Book

Author/Creator:

Sharma, Rishi.

Contributor:

National Bureau of Economic Research.

Slemrod, Joel.

Stimmelmayr, Michael.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31452.

NBER working paper series no. w31452

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

We develop a positive model of multinational firm behavior and analyze a firm's incentive to transfer an intellectual property (IP) right of uncertain value offshore ex ante, i.e. before its success or failure is realized. Our analysis highlights two major aspects of this decision. First, an asymmetric treatment of project gains and losses in the home country creates an incentive to transfer IP to a foreign lowtax country to avoid potentially negative profits at home. These incentives exist even when IP is priced at a fair arms-length price and are further strengthened in the presence of R&D tax incentives. Second, when multinationals have private information about the probability of project success, they have an incentive to transfer their most promising IP ex ante.

Notes:

Print version record

July 2023.