Exploring Residual Profit Allocation

Residual profit allocation (RPA) schemes have come to prominence in discussions of international tax reform but with almost nothing known about their economic impact. These multinationals by allocating “routine” profits source countries and sharing remaining “residual” across on some formulaic basis. This paper explores the implications, conceptual empirical, moving form RPA. are estimated be substantial concentrated relatively few multinational enterprises. The impact revenue appears beneficial for developing countries. Aggregate production efficiency is unlikely increase unless routine lightly taxed. (JEL F23, H25, H87, L25)