U.S. Companies Increasingly Seeking Tax Havens

This report uses data on the operations of U.S. multinational companies (MNCs) to examine the
extent to which, if any, MNCs are moving profits out of high-tax countries (or out of the U.S.)
and into low-tax countries with little corresponding change in business operations, a practice
known as “profit shifting.” To do this, the profits reported by American firms in two groups of
countries are compared with measures of real economic activity in those locations. The first
group consists of the five countries commonly identified as being “tax preferred” or “tax haven”
countries, and includes Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland. The
second group, which provides a baseline for comparison, consists of five more traditional
economies. This group includes Australia, Canada, Germany, Mexico, and the United Kingdom.