profits shifting

Profit shifting occurs when a company moves its profits from one country to another to take advantage of differences in tax laws. For example, a business might report higher earnings in a country with low taxes and lower earnings in a higher-tax country, reducing its overall tax bill. This practice often involves adjusting where costs, revenues, or intellectual property are recorded to legally or creatively lower taxable income in some jurisdictions. While common in multinational corporations, profit shifting can lead to concerns about tax fairness and revenue loss for governments.