Novel Configuration of Formulary Apportionment Using the Correlated Random Effect Approach

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F24%3A43924857" target="_blank" >RIV/62156489:43110/24:43924857 - isvavai.cz</a>

Result on the web

<a href="https://doi.org/10.18267/j.polek.1411" target="_blank" >https://doi.org/10.18267/j.polek.1411</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.18267/j.polek.1411" target="_blank" >10.18267/j.polek.1411</a>

Result language

angličtina

Original language name

Novel Configuration of Formulary Apportionment Using the Correlated Random Effect Approach

Original language description

This paper examines various configurations of the formula under the formulary apportionment methodology from the perspective of the explanatory power of the variability in profitability of multinational companies with the aim to identify the best-performing formula based on analytical evidence of panel microeconomic data. The considered configurations of the formula are based on the novel composition of the allocation formula indicated under the BEFIT proposal, preceding the CCCTB proposal, and traditionally used formulas, at the sub-national level, in Canada and the United States. The empirical analysis uses microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2020. Utilising the correlated random effect approach, accounting for time-specific effects, including the time-constant explanatory variables such as economic activity, classified by NACE codes and the EU Member States&apos; jurisdiction, this paper devises a novel formula configuration. Besides a novel configuration of the apportionment formula, consisting of sales, costs of employees, tangible and intangible assets, this paper estimates proportional weights of apportionment factors and concludes with policy recommendations.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50206 - Finance

Project

—

Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2024

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Politická ekonomie

ISSN

0032-3233

e-ISSN

2336-8225

Volume of the periodical

72

Issue of the periodical within the volume

1

Country of publishing house

CZ - CZECH REPUBLIC

Number of pages

29

Pages from-to

73-101

UT code for WoS article

001177678900004

EID of the result in the Scopus database

2-s2.0-85186596247