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Author: Felix Hugger Publisher: ISBN: Category : Languages : en Pages :
Book Description
Within the framework of its BEPS initiative, the OECD introduced a requirement for non-public country-by-country reporting (CbCR) applying to multinational companies with revenues above EUR 750m. The reports provide data on the global activities and financial structure of multinationals at a country level to tax authorities. This paper investigates the effectiveness of this measure against corporate tax avoidance using a difference-in-difference approach. The analysis is based on financial data both at the group and the subsidiary level. By testing several hypotheses, this paper provides limited support for the effectiveness of CbCR. While the effective tax rates of multinational groups with a reporting requirement increase by about 0.8 percentage points as compared to companies in the control group, the growth rate of total tax payments is unaffected. This seems to be due to a reduction of the tax base which is also due to a rise in leverage and resulting tax-deductible interest payments. At the same time, shifting of profits out of high tax jurisdictions is reduced by CbCR, but not at the expense of low tax OECD countries. CbCR therefore seems to primarily reduce profits located in tax haven affiliates of multinational groups. Lastly, there is little evidence for a distribution of profits closer aligned with frequently suggested apportionment factors.
Author: Felix Hugger Publisher: ISBN: Category : Languages : en Pages :
Book Description
Within the framework of its BEPS initiative, the OECD introduced a requirement for non-public country-by-country reporting (CbCR) applying to multinational companies with revenues above EUR 750m. The reports provide data on the global activities and financial structure of multinationals at a country level to tax authorities. This paper investigates the effectiveness of this measure against corporate tax avoidance using a difference-in-difference approach. The analysis is based on financial data both at the group and the subsidiary level. By testing several hypotheses, this paper provides limited support for the effectiveness of CbCR. While the effective tax rates of multinational groups with a reporting requirement increase by about 0.8 percentage points as compared to companies in the control group, the growth rate of total tax payments is unaffected. This seems to be due to a reduction of the tax base which is also due to a rise in leverage and resulting tax-deductible interest payments. At the same time, shifting of profits out of high tax jurisdictions is reduced by CbCR, but not at the expense of low tax OECD countries. CbCR therefore seems to primarily reduce profits located in tax haven affiliates of multinational groups. Lastly, there is little evidence for a distribution of profits closer aligned with frequently suggested apportionment factors.
Author: Preetika Joshi Publisher: ISBN: Category : Languages : en Pages : 60
Book Description
To combat tax avoidance by multinational corporations, the Organisation for Economic Cooperation and Development introduced country-by-country reporting, requiring firms to provide tax authorities with a geographic breakdown of their profitability and activity. Treating the introduction of country-by-country reporting in the European Union as a shock to private disclosure requirements, this study examines the effect on corporate tax outcomes. Exploiting the €750M threshold and employing a regression discontinuity and difference-in-difference design, I document a 1%-2% increase in consolidated GAAP effective tax rates of the affected firms. I also find some evidence consistent with a decline in tax-motivated income shifting starting in 2018. These results suggest that while private geographic disclosures can have a deterrent impact on overall corporate tax avoidance, the regulations have so far had a limited effect on tax-motivated income shifting. The findings of this study have important policy implications for the global implementation of private country-by-country reporting and add to the ongoing debate on public versus private disclosure of tax information.
Author: Tijmen Tuinsma Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Private Country-by-Country Reporting (CbCR) is a measure against tax avoidance by large multinationals, implemented throughout the EU in 2016. Multinational companies with an annual revenue over € 750 million have been required to report their global activities on a country-by-country basis to tax authorities. Using this cutoff in a sharp regression discontinuity design, we find causal evidence for an increase in effective tax rates for affected companies, indicating an increase in tax compliance. We estimate the increase in effective tax rates at 5 to 6 percentage points locally. However, significant cross-sectional variation is present: the most aggressive multinationals with tax haven affiliates are at most moderately affected, while almost the full effect is concentrated in medium-aggressive firms. From a policy perspective, the results suggest that while CbCR was effective in combating some forms of tax avoidance, profit shifting opportunities in tax havens mostly negate this effect.
Author: Dorian L. Peters Publisher: ISBN: 9781634837750 Category : BUSINESS & ECONOMICS Languages : en Pages : 171
Book Description
Congress and the Obama Administration have expressed interest in addressing multinational corporations' ability to shift profits into low- and no-tax countries with little corresponding change in business operations. Several factors appear to be driving this interest. Economists have estimated that profit shifting results in significant tax revenue losses annually, implying that reducing the practice could help address deficit and debt concerns. Profit shifting and base erosion are also believed to distort the allocation of capital as investment decisions are overly influenced by taxes. Fairness concerns have also been raised. If multinational corporations can avoid or reduce their taxes, other taxpayers (including domestically focused businesses and individuals) may perceive the tax system as unfair. At the same time, policymakers are also concerned that American corporations could be unintentionally harmed if careful consideration is not given to the proper way to reduce profit shifting. This book is intended to assist Congress as it considers what, if any, action to curb profit shifting. This book discusses the methods used for shifting profits only to the extent that it is necessary for interpreting the data or discussing policy options. In addition, this book addresses tax havens; basic concepts and policy issues of U.S. international corporate taxation; and reforms of U.S. international taxation.
Author: OCDE, Publisher: OCDE ISBN: 9789264241466 Category : International business enterprises Languages : en Pages : 70
Book Description
This report contains revised standards for transfer pricing documentation incorporating a master file, local file, and a template for country-by-country reporting of revenues, profits, taxes paid and certain measures of economic activity. The revised standardised approach and will require taxpayers to articulate consistent transfer pricing positions and will provide tax administrations with useful information to assess transfer pricing and other BEPS risks, make determinations about where audit resources can most effectively be deployed, and, in the event audits are called for, provide information to commence and target audit enquiries. Country-by-country reports will be disseminated through an automatic government-to-government exchange mechanism. The implementation package included in this report sets out guidance to ensure that the reports are provided in a timely manner, that confidentiality is preserved and that the information is used appropriately, by incorporating model legislation and model Competent Authority Agreements forming the basis for government-to-government exchanges of the reports
Author: Preetika Joshi Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Tax transparency and exchange of information are at the heart of a global effort to tackle aggressive tax planning of multinational corporations (MNCs). Policymakers worldwide, including within the Organisation for Economic Co-operation and Development, the G20 nations, the European Union, the Financial Accounting Standard Board, and the United Nations, have strived to enhance tax disclosures. Even with this push for global tax transparency, evidence is lacking about whether regulations achieve the desired effects. This dissertation examines the corporate tax avoidance and income shifting of European Union MNCs following the adoption of two transparency rules: private country-by-country reporting under Action Item 13 of OECDs base-erosion and profit-shifting project and public country-by-country reporting under Capital Requirements Directive IV. In examining response to private country by country reporting, I document no significant difference in tax-motivated income shifting in the three-year post-adoption period. However, starting in 2018, I find that affiliates of European Union MNCs engaged in significantly less profit shifting. I also find robust evidence of an increase in effective tax rates of European Union MNCs subject to private country by country reporting. Overall these results suggest that, while the introduction of private country by country reporting led to a significant decline in firm-level tax avoidance, the impact on affiliate-level income shifting has been limited. In examining the effects of public country-by-country reporting, I document a significant decrease in the income shifting by the industrial affiliates of European multinational banks subject to the disclosure requirements. The findings of this study have important policy implications for the global implementation of country-by-country reporting and extend the debate on public versus private disclosure of tax information.
Author: Thomas Pogge Publisher: Oxford University Press ISBN: 019103861X Category : Business & Economics Languages : en Pages : 383
Book Description
This book addresses sixteen different reform proposals that are urgently needed to correct the fault lines in the international tax system as it exists today, and which deprive both developing and developed countries of critical tax resources. It offers clear and concrete ideas on how the reforms can be achieved and why they are important for a more just and equitable global system to prevail. The key to reducing the tax gap and consequent human rights deficit in poor countries is global financial transparency. Such transparency is essential to curbing illicit financial flows that drain less developed countries of capital and tax revenues, and are an impediment to sustainable development. A major break-through for financial transparency is now within reach. The policy reforms outlined in this book not only advance tax justice but also protect human rights by curtailing illegal activity and making available more resources for development. While the reforms are realistic they require both political and an informed and engaged civil society that can put pressure on governments and policy makers to act.
Author: OECD Publisher: OECD Publishing ISBN: 9264202714 Category : Languages : en Pages : 44
Book Description
This action plan, created in response to a request by the G20, identifies a set of domestic and international actions to address the problems of base erosion and profit sharing.
Author: José Manuel Almudí Cid Publisher: Kluwer Law International B.V. ISBN: 9403501421 Category : Law Languages : en Pages : 656
Book Description
Following each Member State's need to rebuild a strong and stable economy after the 2007 financial crisis, the European Union (EU) has developed a robust new transparency framework with binding anti-abuse measures and stronger instruments to challenge external threats of base erosion. This is the first and only book to provide a complete detailed analysis of the Anti-Tax Avoidance Package and other recent and ongoing European actions taken in direct taxation. With contributions from both prominent tax academics and Spain's delegates to the European meetings where these rules are debated and promulgated, the book covers such issues and topics as the following: – the development of the EU Strategy towards Aggressive Tax Planning; – recent tax-related jurisprudence of the European Court of Justice; – the Anti-Tax Avoidance Directive; – tax treaties and non-tax treaties with tax consequences both between Member States and between Member States and third countries; – code of conduct for business taxation; – automatic exchange of information; – country-by-country reporting; – arbitration in tax matters; – external strategy for effective taxation regarding non-EU countries; – competition and state aid developments in direct taxation; – the Common Consolidated Tax Base; and – digital significant presence and permanent establishment. As the EU pursues its ambitious tax agenda, taxation's contribution to EU growth and competitiveness and its part in relations with the rest of the world will come into ever clearer focus. In addition to its insights into these trends, the book's unparalleled practical information and analysis will be of great value to tax practitioners dealing with investment analysis, tax planning schemes, and other features of the current international tax landscape.
Author: Sebastian Beer Publisher: International Monetary Fund ISBN: 148436399X Category : Business & Economics Languages : en Pages : 45
Book Description
This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions. Moreover, it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, on average, a 1 percentage-point lower corporate tax rate will expand before-tax income by 1 percent—an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research.
Author: Felix Hugger
Author: Felix Hugger
Author: Preetika Joshi
Author: Tijmen Tuinsma
Author: Dorian L. Peters
Author: OCDE,
Author: Preetika Joshi
Author: Thomas Pogge
Author: OECD
Author: José Manuel Almudí Cid
Author: Sebastian Beer