Aggressive Tax Planning (ATP) includes a set of practices aimed at exploiting mismatches and loopholes in the international tax framework in order to reduce the tax burden of multi-national enterprises (MNEs).
The measurement of base erosion and profit shifting (BEPS) is relevant not only for monitoring the phenomenon and informing policies aimed at contrasting it, but also for assessing related illicit financial flows and adjusting gross domestic product (GDP) in national accounts.
The main contribution of this work is to provide a firm-level estimate of BEPS by using a bottom-up method relying on the analysis of Italian microdata. In particular, the PS-ROC method presented here identifies tax avoiding MNEs and provides a point measurement of the amount of profits they shift abroad. Results show that about 60% of Italian MNEs use ATP strategies, under-reporting 32.3 billion euros, about 2% of the Italian GDP.
