Multinational corporations and tax havens: evidence from country-by-country reporting

Garcia‐Bernardo, Javier; Jánský, Petr; Tørsløv, Thomas

doi:10.1007/s10797-020-09639-w

Cited by 35 publications

(24 citation statements)

References 43 publications

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“…Regarding H1 (the positive relationship between direct and the use of tax havens), Model I in Table 2 shows that for every 1% increase in the tax effectively paid (ETR), there is a 79% increase in the probability of MNCs opening subsidiaries in tax havens. This result aligns with the findings of Christensen et al (2021) and Garcia-Bernardo et al (2021). Furthermore, the confirmation of H2…”

Section: Robustness Testssupporting

confidence: 91%

Tax havens and transfer pricing strategies: Insights from emerging economies

Fonseca,

Jucá,

Vieito

2024

Thunderbird Intl Bus Rev

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This study examines multinational companies in emerging markets, exploring their transfer pricing strategies for establishing tax havens. These companies employ various mechanisms (e.g., transfer pricing, profit transfers, and the reallocation of intangible assets) to minimize their tax liabilities. Today an increasing level of intangible assets facilitates smoother profit transfers to jurisdictions with lower tax burdens. Furthermore, these companies relocate their productive activities to tax havens, creating opportunities for corporate tax evasion and avoidance. Despite the efforts of governments and international organizations to propose the adoption of a minimum tax rate for different countries, these companies have been able to reduce or completely avoid paying taxes. Our study sample includes companies headquartered in emerging countries between 2010 and 2020. The study introduces some innovative elements, such as the variable “transfer pricing intensity,” which is derived from manual data collection. This variable enables analysis of the transfer pricing levels employed by multinational companies. In addition, a noteworthy contribution of this research is the use of an unconventional tax proxy known as AREA, which monitors the tax benefits associated with short‐ and long‐term debts. The results demonstrate that these companies employ a diverse range of instruments, often in combination, to reduce taxes in their conglomerates. These findings contribute significantly to a deeper understanding of the intricacies surrounding corporate tax optimization practices and provide valuable insights for governments in formulating robust policies that promote transparency and accountability in the international tax landscape.

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Section: Robustness Testssupporting

confidence: 91%

Tax havens and transfer pricing strategies: Insights from emerging economies

Fonseca,

Jucá,

Vieito

2024

Thunderbird Intl Bus Rev

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“…These disparities simply reveal the existence of aggressive tax planning schemes used to divert taxable profi ts from less fi scally attractive countries to territories where taxation is low or even zero. This evidence of profi t shifting is well described in Garcia-Bernando et al (2021).…”

Section: Country-by-country Reports Of Us Multinationalssupporting

confidence: 68%

Country-by-Country Reporting: A Step Towards Unitary Taxation?

Viegas

Dias

2021

Intereconomics

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Multinational companies are now obliged to deliver an annual report to the tax authorities with information disaggregated by country (country-by-country reporting) in order to show where the assets and workers are allocated, how profits are distributed and to whom taxes are paid. Unfortunately, these reports are not made public in the European Union, thus preventing public scrutiny about the strategies used by multinational companies to displace profits to tax havens. This article applies the Unitary Taxation regime proposed by the European Commission to US multinational companies. The results confirm a strong bias among the profits distribution towards countries with lower corporate tax rates. Likewise, they confirm the capacity of the Unitary Taxation to promote a fairer distribution of tax revenues. These results can be a good contribution to the current Portuguese presidency of the European Union, which managed to gather important support to move forward with the European public country-by-country reporting directive.

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“…A few studies use the first wave of data published by the IRS and examine their advantages and problems. In terms of coverage, these studies document that the IRS CbCRs are clearly superior to Orbis (Garcia-Bernardo et al, 2019) and even contain information on more than twice as many countries as the public BEA data series (Clausing, 2020;Garcia-Bernardo et al, 2019). Concerning the double-counting issue, CbCRs do not suffer from the problems inherent in the BEA data as the method of profit allocation differs (Blouin & Robinson, 2020 The data for 2016 are mainly based on voluntary reports, the data for 2017 represent the first full year of mandatory reports.…”

Section: Country-by-country Reportingmentioning

confidence: 93%

On the Determinants and Effects of Corporate Tax Transparency: Review of an Emerging Literature

Müller¹,

Spengel²,

Vay³

2020

SSRN Journal

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In response to discussions about large multinational enterprises' tax planning activities, legislators around the world have adopted numerous regulations to increase corporate tax transparency. New settings and datasets have spurred empirical research in recent years. Our paper presents a review of this emerging literature on corporate tax transparency. To this end, we first propose a framework to structure the diverse landscape of tax-related disclosures. Second, we elaborate on the conceptual underpinnings of tax transparency by drawing on established theories from financial accounting and CSR reporting research. Third, we survey empirical evidence on corporate tax transparency. We classify the findings into (i) determinants of firms' tax disclosure decisions, (ii) informativeness of different kinds of tax-related disclosure, and (iii) effects of increased tax transparency on firms and their stakeholders. Finally, we synthesize the main inferences and offer suggestions for future research.

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Multinational corporations and tax havens: evidence from country-by-country reporting

Cited by 35 publications

References 43 publications

Tax havens and transfer pricing strategies: Insights from emerging economies

Tax havens and transfer pricing strategies: Insights from emerging economies

Country-by-Country Reporting: A Step Towards Unitary Taxation?

On the Determinants and Effects of Corporate Tax Transparency: Review of an Emerging Literature

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