We estimate the semi-elasticities of profit shifting of multinationalcorporations with corporate tax rate gap using firm-level micro panel data. Wedistinguish the estimation with the overseas subsidiaries of the Korean firmsfrom the foreign cases. We also distinguish the cases whether the parentcorporations or the subsidiaries are located in the low tax rate countries andtry to see any policy implication from this. The semi-elasticity with the Koreansubsidiaries facing the Korean corporate tax rate is estimated at 1.55, whichis higher than 1.05 with the foreign subsidiaries. If the corporate tax rate ofthe country where the Korean subsidiaries are located is higher than theKorea’s, the semi-elasticity is estimated to be 4.15, which is more than threetimes higher than the otherwise expected 1.36. In the case of foreigncorporations as well, if the corporate tax rate faced by the parent corporationsis lower than the subsidiaries, the estimated semi-elasticity of 2.196 is 1.8times higher than the otherwise estimated 1.246. We conclude that the effectof tax rate gap on profit shifting is greater when the parent corporations arelocated in the low tax rate countries than the subsidiaries. That is, the effectof profit shifting is greater when the countries of the parent corporations,rather than the subsidiaries, cut the corporate tax rate.