Uncertainty in Weighting Formulary Apportionment Factors and its Impact on After-Tax Income of Multinational Groups

Regina Ortmann

Publication: Working/Discussion PaperWU Working Paper


Formulary apportionment is an intensively debated mechanism for allocating tax base within
multinational groups. Systems under which the formula is identical in all jurisdictions and systems
under which jurisdictions can determine the weights on the formula factors individually can be
observed. The latter systems produce uncertainty about the overall tax-liable share of the future group
tax base. Counter-intuitively, I identify scenarios under which increased uncertainty leads to higher
expected future group income. My results provide helpful insights for firms and policy makers
debating the specific design of a formulary apportionment system. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 2015

Publication series

NameWU International Taxation Research Paper Series

WU Working Paper Series

  • WU International Taxation Research Paper Series

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