A session on Multinational Profit Shifting and Illicit Flows? Can We Measure Them?

On 20 August 2019, UNCTAD organized a session on Multinational Profit Shifting and Illicit Flows? Can We Measure Them? The session discussed how official statistics should respond to the urgent need to measure multinational profit shifting and related financial flows in the context of the 2030 Agenda.

The large impact of financial flows related to tax and profit optimization raises the question if GDP and other key economic statistics are still valid as measures of domestic production. The increasing use of intellectual property as capital assets has had a notable impact on the measurement and interpretation of national accounts and balance of payments statistics. Relocation of intellectual property can change the location where exports and income are recorded. The question is then if economic statistics can still be used correctly for designing monetary policy and directing economic policy.

There is a pressing need for better and more information on multinational enterprises and their activities. While we lack statistics to analyse the full picture, several useful indicators of profit shifting have been developed, such as the ratio of profits to compensation of employees and estimates that reallocate multinationals’ profits based on economic activity (production or employment) rather than reported profits. The session discussed ways to make statistics more informative in this regard.

• Organiser: Steve Macfeely
• Chair: Fernando Cantu
• Discussant: Anu Peltola