Volume 9 • 2022 • Number transnational corporations investment and development

6. Data and empirical calibration
6.1. Sample of countries
The analysis covers 208 economies, including 53 developed economies and 155 
developing ones. This extensive coverage is a distinctive feature of this study and is 
crucial for a better understanding of the impact of Pillar Two worldwide.
Of these 208 economies, 39 are classified as OFCs following the classification 
established by Tørsløv et al. (2021).
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OFCs are generally defined as jurisdictions 
where corporate income tax rates are low and where financial secrecy provides 
additional opportunities for tax avoidance. Following Tørsløv et al. (2021), we 
separate Belgium, Cyprus, Ireland, Luxembourg, Malta, the Netherlands and 
Switzerland from the rest. The remaining 32 OFCs are pooled together and form a 
composite OFC. The list is highly consistent with other classifications (e.g. Dyreng 
and Lindsey, 2009; Hines and Rice, 1994), and is also substantially aligned with 
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This statement holds under the hypothesis that high-tax countries are more exposed to outward profit 
shifting, Evidence of this can be found in section 6.
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This statement holds under reasonable assumptions. For example, profit shifting must not be too 
large. In an extreme configuration in which all profits are initially shifted to OFCs and profit shifting 
significantly declines after the reform, FDI-level ETR differentials might increase overall. Nevertheless, 
this case remains purely theoretical and is unlikely to occur in practice. 
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The list includes: Andorra, Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Bahrain, Barbados, 
Belgium, Belize, Bermuda, British Virgin Islands, Cayman Islands, Curacao, Cyprus, Grenada, 
Guernsey, Gibraltar, Hong Kong (China), Ireland, Isle of Man, Jersey, Lebanon, Liechtenstein, 
Luxembourg, Macao (China), Malta, Marshall Islands, Mauritius, Monaco, the Netherlands, Panama, 
Puerto Rico, Seychelles, Singapore, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the 
Grenadines, Switzerland and Turks and Caicos. Bonaire and Sint Maarten, included in Tørsløv et al. 
(2021), are excluded here due to data shortcomings.

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A new framework to assess the fiscal impact of a global minimum tax on FDI
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the one used in previous UNCTAD studies (Bolwijn et al., 2018; Casella, 2019; 
UNCTAD, 2015).
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