Location-sector analysis of international profit shifting on a multilayer ownership-tax network

  • Tembo NakamotoEmail author
  • Odile Rouhban
  • Yuichi Ikeda


Currently all countries including developing countries are expected to utilize their own tax revenues and carry out their own development for solving poverty in their countries. However, developing countries cannot earn tax revenues like developed countries partly because they do not have effective countermeasures against international tax avoidance. Our analysis focuses on treaty shopping among various ways to conduct international tax avoidance because tax revenues of developing countries have been heavily damaged through treaty shopping. To analyze the location and sector of conduit firms likely to be used for treaty shopping, we constructed a multilayer ownership-tax network and proposed multilayer centrality. Because multilayer centrality can consider not only the value flowing in the ownership network but also the withholding tax rate, it is expected to grasp precisely the locations and sectors of conduit firms established for the purpose of treaty shopping. Our analysis shows that firms in the sectors of Finance and Insurance and Wholesale and Retail trade etc. are involved with treaty shopping. We suggest that developing countries make a clause focusing on these sectors in the tax treaties they conclude.


Network analysis Multilayer network International taxation Profit shifting Treaty shopping 

JEL Classification

F23 H25 



We would like to thank Tadao Okamura and Hiroaki Takashima for valuable comments.

Compliance with ethical standards


This study was funded by the Ministry of Education, Science, Sports, and Culture (Grants-in-Aid for Scientific Research (B), Grant No. 17KT0034 (2017-2019) and Exploratory Challenges on Post-K computer (Studies of Multi-level Spatiotemporal Simulation of Socioeconomic Phenomena)).

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest. Author OR declares that she has no conflict of interest. Author YI declares that he has no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.


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Copyright information

© Japan Association for Evolutionary Economics 2019

Authors and Affiliations

  1. 1.Graduate School of Advanced Integrated Studies in Human SurvivabilityKyoto UniversityKyotoJapan
  2. 2.Guest Research AssociateKyoto UniversityKyotoJapan

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