Effective tax rates of multinational corporations: Country-level estimates.

Effective tax rates (ETRs) estimated from the income statement data of multinational corporations (MNCs) are useful for comparing MNCs' corporate income taxation across countries. In this paper, we propose a new methodological approach to estimate ETRs as reliably and for as many countries as possible using Orbis' unconsolidated data for the 2011-2015 period. We focus on countries with at least 50 available companies, which results in a sample of 47, mostly European, countries. We estimate the ETR of a country as the ratio of corporate income tax to gross income for all affiliates of MNCs in that country, weighted by gross income. We propose four ETR estimations, including lower and upper bounds, which differ by gross income calculation. We find that ETRs substantially differ from statutory tax rates for some countries. For example, we show that despite similar statutory rates of 28% and 29%, MNCs in Luxembourg paid as little as 1-8% of gross income in taxes, while those in Norway paid as much as 46-67%. Despite being the best available, existing data is still imperfect. We therefore call for better data in the form of MNCs' unconsolidated, public country-by-country reporting data.

Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network.

Multinational corporations use highly complex structures of parents and subsidiaries to organize their operations and ownership. Offshore Financial Centers (OFCs) facilitate these structures through low taxation and lenient regulation, but are increasingly under scrutiny, for instance for enabling tax avoidance. Therefore, the identification of OFC jurisdictions has become a politicized and contested issue. We introduce a novel data-driven approach for identifying OFCs based on the global corporate ownership network, in which over 98 million firms (nodes) are connected through 71 million ownership relations. This granular firm-level network data uniquely allows identifying both sink-OFCs and conduit-OFCs. Sink-OFCs attract and retain foreign capital while conduit-OFCs are attractive intermediate destinations in the routing of international investments and enable the transfer of capital without taxation. We identify 24 sink-OFCs. In addition, a small set of five countries - the Netherlands, the United Kingdom, Ireland, Singapore and Switzerland - canalize the majority of corporate offshore investment as conduit-OFCs. Each conduit jurisdiction is specialized in a geographical area and there is significant specialization based on industrial sectors. Against the idea of OFCs as exotic small islands that cannot be regulated, we show that many sink and conduit-OFCs are highly developed countries.

Phenotypic Diversity Using Bimodal and Unimodal Expression of Stress Response Proteins.

Populations of cells need to express proteins to survive the sudden appearance of stressors. However, these mechanisms may be taxing. Populations can introduce diversity, allowing individual cells to stochastically switch between fast-growing and stress-tolerant states. One way to achieve this is to use genetic networks coupled with noise to generate bimodal distributions with two distinct subpopulations, each adapted to a stress condition. Another survival strategy is to rely on random fluctuations in gene expression to produce continuous, unimodal distributions of the stress response protein. To quantify the environmental conditions where bimodal versus unimodal expression is beneficial, we used a differential evolution algorithm to evolve optimal distributions of stress response proteins given environments with sudden fluctuations between low and high stress. We found that bimodality evolved for a large range of environmental conditions. However, we asked whether these findings were an artifact of considering two well-defined stress environments (low and high stress). As noise in the environment increases, or when there is an intermediate environment (medium stress), the benefits of bimodality decrease. Our results indicate that under realistic conditions, a continuum of resistance phenotypes generated through a unimodal distribution is sufficient to ensure survival without a high cost to the population.

Noise and low-level dynamics can coordinate multicomponent bet hedging mechanisms.

To counter future uncertainty, cells can stochastically express stress response mechanisms to diversify their population and hedge against stress. This approach allows a small subset of the population to survive without the prohibitive cost of constantly expressing resistance machinery at the population level. However, expression of multiple genes in concert is often needed to ensure survival, requiring coordination of infrequent events across many downstream targets. This raises the question of how cells orchestrate the timing of multiple rare events without adding cost. To investigate this, we used a stochastic model to study regulation of downstream target genes by a transcription factor. We compared several upstream regulator profiles, including constant expression, pulsatile dynamics, and noisy expression. We found that pulsatile dynamics and noise are sufficient to coordinate expression of multiple downstream genes. Notably, this is true even when fluctuations in the upstream regulator are far below the dissociation constants of the regulated genes, as with infrequently activated genes. As an example, we simulated the dynamics of the multiple antibiotic resistance activator (MarA) and 40 diverse downstream genes it regulates, determining that low-level dynamics in MarA are sufficient to coordinate expression of resistance mechanisms. We also demonstrated that noise can play a similar coordinating role. Importantly, we found that these benefits are present without a corresponding increase in the population-level cost. Therefore, our model suggests that low-level dynamics or noise in a transcription factor can coordinate expression of multiple stress response mechanisms by engaging them simultaneously without adding to the overall cost.

Evolving modular genetic regulatory networks with a recursive, top-down approach.

Being able to design genetic regulatory networks (GRNs) to achieve a desired cellular function is one of the main goals of synthetic biology. However, determining minimal GRNs that produce desired time-series behaviors is non-trivial. In this paper, we propose a 'top-down' approach to evolving small GRNs and then use these to recursively boot-strap the identification of larger, more complex, modular GRNs. We start with relatively dense GRNs and then use differential evolution (DE) to evolve interaction coefficients. When the target dynamical behavior is found embedded in a dense GRN, we narrow the focus of the search and begin aggressively pruning out excess interactions at the end of each generation. We first show that the method can quickly rediscover known small GRNs for a toggle switch and an oscillatory circuit. Next we include these GRNs as non-evolvable subnetworks in the subsequent evolution of more complex, modular GRNs. Successful solutions found in canonical DE where we truncated small interactions to zero, with or without an interaction penalty term, invariably contained many excess interactions. In contrast, by incorporating aggressive pruning and the penalty term, the DE was able to find minimal or nearly minimal GRNs in all test problems.

Tunable stochastic pulsing in the Escherichia coli multiple antibiotic resistance network from interlinked positive and negative feedback loops.

Cells live in uncertain, dynamic environments and have many mechanisms for sensing and responding to changes in their surroundings. However, sudden fluctuations in the environment can be catastrophic to a population if it relies solely on sensory responses, which have a delay associated with them. Cells can reconcile these effects by using a tunable stochastic response, where in the absence of a stressor they create phenotypic diversity within an isogenic population, but use a deterministic response when stressors are sensed. Here, we develop a stochastic model of the multiple antibiotic resistance network of Escherichia coli and show that it can produce tunable stochastic pulses in the activator MarA. In particular, we show that a combination of interlinked positive and negative feedback loops plays an important role in setting the dynamics of the stochastic pulses. Negative feedback produces a pulsatile response that is tunable, while positive feedback serves to amplify the effect. Our simulations show that the uninduced native network is in a parameter regime that is of low cost to the cell (taxing resistance mechanisms are expressed infrequently) and also elevated noise strength (phenotypic variability is high). The stochastic pulsing can be tuned by MarA induction such that variability is decreased once stresses are sensed, avoiding the detrimental effects of noise when an optimal MarA concentration is needed. We further show that variability in the expression of MarA can act as a bet hedging mechanism, allowing for survival in time-varying stress environments, however this effect is tunable to allow for a fully induced, deterministic response in the presence of a stressor.