This paper develops a data-driven methodology for detecting potential profit shifting by multinational enterprises in South Africa. Drawing on detailed administrative tax and customs data, we construct a series of red-flag indicators based on firm-level profitability, intra-group transactions, and trade with tax haven jurisdictions. A firm is flagged only if it persistently reports profits below its industry average while exhibiting at least one additional red flag related to related-party debt, service payments, or haven-linked trade. Although less than 1% of multinational enterprises are flagged, this small subset accounts for a disproportionately large share of potential tax revenue at risk. The approach offers a practical and replicable framework for tax administrations in developing countries seeking to prioritise audits and strengthen domestic resource mobilization using existing administrative data.
Matthew Amalitinga Abagna, Miroslav Palansky, Ronald B. Davies ■ Detecting Profit Shifting in Administrative Data: A South African Perspective
Detecting Profit Shifting in Administrative Data: A South African Perspective
A practical framework for tax administrations in developing countries to prioritise audits and strengthen domestic resource mobilisation using existing data.
