Digital economy firms are often accused of avoiding profit taxes on a large scale, prompting numerous countries to impose digital service taxes on these firms to indirectly tax their profits. We study the incidence of digital service taxes using data on Amazon’s fee structure and pricing. We find that Amazon increased its fees by almost the exact amount of the digital service tax. Firms using Amazon as a platform have largely been able to pass these increased costs onto consumers. On average, the incidence of digital service taxes falls almost entirely on consumers, though there is significant heterogeneity among countries.

This paper presents simulations of the tax revenue arising from the Pillar One Amount A proposal of the G20/OECD. Amount A aims at revising taxing rights on multinational enterprises with at least EUR 20 billion in revenue and with profitability above 10%. In a first step, we identify the MNEs that would be covered by Amount A. Then, we approximate the destination-based revenues of MNEs in different jurisdictions, to determine reallocated profits. In a final step, we account for double taxation relief to obtain the net revenue from Amount A. We find that the total amount of additional tax revenue arising from Amount A is around EUR15.6 billion. The extent of taxing rights redistribution induced by Amount A is affected by (a) the inclusion criteria of covered MNEs; (b) the reallocation parameter of 25 percent.

In 2021, the OECD announced that over 130 jurisdictions supported its “Pillar 2” proposal for a 15 percent global minimum effective tax rate for large multinational enterprises. This proposal has since been adopted unanimously by the European Union, and has come into force on 1 January 2024. We employ an event study methodology using daily 2021 stock market returns of 3.275 European firms to determine how Pillar 2 announcements affected the value of firms subject to the global minimum tax, and that of their competitors. While we find no significant impact on the stock market returns of directly affected firms, we do find a positive effect on the returns of their competitors. Our results suggest that the introduction of a global minimum tax for large multinational enterprises can be beneficial for their competitors, shedding light on the role of a minimum tax on inter-firm competition and the level playing field.

This paper examines the most direct method to curb European profit shifting: an EU-wide adoption of unitary taxation. Using country-by-country reporting data, we estimate country-level revenue changes when taxable profits are distributed based on different formulas measuring economic activity. We find that tax revenues would increase for most EU members. While some countries – in particular the Netherlands, Luxembourg, Ireland, and Malta – may incur losses, these can be offset by adopting an effective national top-up tax, consistent with the EU's plan to introduce a minimum corporate tax of 15%. Our findings indicate that unitary taxation would not only restore fair competition and significantly boost EU-wide tax revenues—ranging from US$ 24.1 to US$ 26.8 billion in isolation or US$ 34.5 to US$ 35.4 billion when combined with the minimum tax—but is also politically feasible: When coupled with the minimum corporate tax, no member state would lose from its implementation.