A note on tax research

Jacob, Martin

doi:10.1590/1808-057x201890280

Cited by 9 publications

(15 citation statements)

References 32 publications

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“…We obtain relevant results from the novel Brazilian context, where the domestic TP rules are arbitrary and do not follow the traditional arm's length principle (Lohse et al, 2012). Brazil has one of the highest tax burdens in the world (Jacob, 2018), and our findings endorse the intuitive perception that Brazilian firms shift taxable profits to low-tax countries. This motivates us to advance on the investigation of the shifting behavior of firms, thus to further develop the profit shifting research in Brazil.…”

Section: Introductionsupporting

confidence: 84%

“…The only study dedicated to investigate international profit shifting in Brazil is the one of Rathke (2014), which finds that Brazilian firms are able to transfer taxable profits away from Brazil, therefore resulting in a reduction of the total tax burden of the Brazilian consolidated group. Brazil provides a favorable context for the profit shifting research, since it combines an extremely high corporate taxation, one of the most complex tax systems in the world (Jacob, 2018), and the most distinguished set of transfer pricing (TP) rules in the world (Lohse et al,, 2012). In special, the Brazilian TP rules do not follow the arm's length principle, which is the main principle applied by the OECD guidelines worldwide (Lohse et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

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Profit shifting in Brazil and the impact of tax havens

Rathke

2021

Rev. contab. finanç.

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We investigate tax-induced profit shifting in Brazil and the impact of tax havens on the shifting behavior of firms. Profit shifting research in Brazil is virtually non-existent, although the shifting incentives in Brazil are prominent. Our research fills this gap with evidences in the novel Brazilian context. Profit shifting is a tax-minimization strategy where multinational enterprises perform intra-firm transactions to allocate taxable profits to low-tax locations. Brazil combines a remarking set of profit shifting incentives, especially a high corporate tax rate, extremely complex tax system, and distinguished transfer pricing rules. Further researches may leverage from the shifting incentives in Brazil, since it provides opportunities to investigate additional factors that affect the shifting behavior of firms. We analyze 989 transaction-by-country observations for the period of 2010-2017. Baseline analysis follows the robust least squares approach with controlling covariates. Linear estimate model derives from the conventional Cobb-Douglas production function, to analyze the impact of shifting incentives on profit maximization. We find that Brazilian firms have a high level of intra-firm transactions with related parties located in low-tax countries, especially with tax havens. It represents a strong evidence of profit shifting behavior in Brazilian firms.

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Section: Introductionsupporting

confidence: 84%

Section: Introductionmentioning

confidence: 99%

Profit shifting in Brazil and the impact of tax havens

Rathke

2021

Rev. contab. finanç.

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show abstract

“…We obtain relevant results from the novel Brazilian context, where the domestic transfer pricing rules are arbitrary and do not follow the traditional arm's length principle (Lohse, Riedel & Spengel, 2012). Brazil has one of the highest tax burdens in the world (Jacob, 2018), and our findings corroborate the intuitive perception that Brazilian firms shift taxable profits to low-tax countries. This motivates us to advance on the investigation of the shifting behaviour of Brazilian firms, thus to further develop the profit shifting research in Brazil.…”

Section: Introductionsupporting

confidence: 85%

“…Although it is a well-established subject in tax literature, profit shifting research in Brazil is virtually non-existent. Brazil provides a favourable case for the analysis, since it combines an extremely high corporate taxation, one of the most complex tax systems in the world, and the most distinguished set of transfer pricing rules in the world (Jacob, 2018;Lohse, Riedel & Spengel, 2012).…”

Section: A General Introductionmentioning

confidence: 99%

“…The only study dedicated to investigate profit shifting in Brazil is the one of Rathke (2014), which finds that Brazilian firms are able to transfer taxable profits away from Brazil, therefore resulting in a reduction of the total tax burden of the Brazilian consolidated group. Brazil provides a favourable context for the profit shifting research, since it combines an extremely high corporate taxation, one of the most complex tax systems in the world (Jacob, 2018), and the most distinguished set of transfer pricing rules in the world (Lohse & Riedel, 2013;Lohse, Riedel & Spengel, 2012).…”

Section: Introductionmentioning

confidence: 99%

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