A large proportion of the world's stock of foreign direct investment is "phantom" capital, designed to minimise companies' tax liabilities rather than financing productive activity, according to research.

Nearly 40 per cent of worldwide FDI — worth a total of US$15tn — "passes through empty corporate shells" with "no real business activities", the study by the IMF and the University of Copenhagen found.

Instead, they are a vehicle for financial engineering, "often to minimise multinationals' global tax bill", said researchers Jannick Damgaard, Thomas Elkjaer, and Niels Johannesen, who carried out the study.

The findings come at a time when governments

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