Does Public Country-by-Country Reporting Deter Tax Avoidance and Income-Shifting? Evidence From Capital Requirements Directive IV

2019 ◽  
Author(s):  
Preetika Joshi ◽  
Edmund Outslay ◽  
Anh Vuong Persson
Keyword(s):  
Tax Avoidance ◽  
Capital Requirements ◽  
Income Shifting

scholarly journals Quantifying International Tax Avoidance: A Review of the Academic Literature

2018 ◽  
Vol 69 (2) ◽  
pp. 169-181 ◽  
Author(s):  
Nadine Riedel
Keyword(s):  
Intellectual Property ◽  
Tax Avoidance ◽  
Data Sources ◽  
Avoidance Behaviour ◽  
Income Shifting ◽  
Profit Shifting ◽  
Academic Literature ◽  
Quantitative Estimates ◽  
Debt Shifting ◽  
Quantitative Importance

Abstract This paper provides a brief review of the academic literature that assesses the quantitative importance of tax avoidance behaviour of multinational entities (MNEs) by means of income shifting from high-tax to low-tax affiliates. Existing studies unanimously report evidence in line with tax-motivated profit shifting (despite using different data sources and estimation strategies). In terms of shifting channels, there is evidence consistent with strategic mispricing of intra-firm trade, the location of valuable intellectual property at low-tax affiliates and debt-shifting activities. The quantitative estimates vary across approaches and studies though. The paper moreover stresses that some care should be warranted when interpreting profit shifting estimates as they often rely on non-trivial assumptions.

Tax and Nontax Incentives in Income Shifting: Evidence from Shadow Insurers

2019 ◽  
Vol 95 (4) ◽  
pp. 219-262 ◽  
Author(s):  
Bradford F. Hepfer ◽  
Jaron H. Wilde ◽  
Ryan J. Wilson
Keyword(s):  
Life Insurance ◽  
Capital Requirements ◽  
Dominant Factor ◽  
Income Shifting ◽  
Regulatory Capital ◽  
Tax Havens ◽  
Insurance Firms ◽  
Jobs Act ◽  
Insurance Tax ◽  
Liquid Asset Holdings

ABSTRACT Using the shadow insurance setting, we study the interplay between tax and nontax incentives in income shifting. Shadow insurance involves intercompany transactions designed to help firms meet regulatory capital requirements. However, prior to the Tax Cuts and Jobs Act of 2017 (TCJA), foreign-owned life insurance firms could save taxes by using shadow insurance to shift U.S. profits to tax havens. Consistent with expectations, we find that while nontax incentives appear to be the dominant factor behind firms' use of shadow insurance, tax considerations also played a role for certain firms. We also find that shadow insurance is associated with lower liquid asset holdings and increased credit risk. Overall, our results suggest that taxes were an important incentive for foreign-owned life insurance firms to use shadow insurance pre-TCJA. Moreover, in this setting, nontax considerations appeared to have motivated U.S.-owned firms' use of tax havens.

scholarly journals Optimal fiscal policy in an open economy with capital income shifting and consumer cross-border purchases

Equilibrium ◽  
2015 ◽  
Vol 10 (2) ◽  
pp. 9
Author(s):  
Janusz Kudła ◽  
Agata Kocia ◽  
Katarzyna Kopczewska ◽  
Robert Kruszewski ◽  
Konrad Walczyk
Keyword(s):  
Fiscal Policy ◽  
Open Economy ◽  
Public Debt ◽  
Tax Avoidance ◽  
Income Shifting ◽  
Tax Rates ◽  
Consumption Tax ◽  
Capital Income ◽  
Marginal Rate ◽  
Tax Rate

The paper presents a fiscal policy model integrating tax avoidance, the complexity of tax systems and the fiscal solvency hypothesis within the traditional framework of tax competition. Furthermore, we take into account: taxation of consumption, possibility of capital income shifting and foreign goods purchases (untaxed in the destination country). We conclude that if fiscal policy is by no means unfettered the equilibrium can be allocation efficient, provided that the marginal rate of substitution between private and public goods is one. The changes in public debt affect tax rates in equilibrium differently: positively for the consumption tax rate and negatively for the labor tax rate. The change of the capital tax depends on the level of economic internalization. This approach is especially useful during a solvency crisis and can be applied to predict tax rates’ adjustment when the bonds issuance decreases or public debt accelerates.

Does Public Country‐by‐Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry*

2020 ◽  
Vol 37 (4) ◽  
pp. 2357-2397 ◽  
Author(s):  
Preetika Joshi ◽  
Edmund Outslay ◽  
Anh Persson ◽  
Terry Shevlin ◽  
Aruhn Venkat
Keyword(s):  
Banking Industry ◽  
Tax Avoidance ◽  
Income Shifting ◽  
European Banking

Income Shifting and Tax Avoidance using Tax Havens

2020 ◽  
Vol 45 (3) ◽  
pp. 137-171
Author(s):  
Jong Kwon Ko ◽  
Hee Jin Park ◽  
Sung-Soo Yoon
Keyword(s):  
Tax Avoidance ◽  
Income Shifting ◽  
Tax Havens

Income Shifting and Tax Avoidance of Korean Business Groups using Related Party Transactions

2020 ◽  
Vol 37 (4) ◽  
pp. 45-77
Author(s):  
Jong Kwon Ko ◽  
Hee Jin Park
Keyword(s):  
Business Groups ◽  
Tax Avoidance ◽  
Income Shifting ◽  
Related Party Transactions

Income Shifting as an Aspect of Tax Avoidance: Evidence from U.S. Multinational Corporations

2018 ◽  
Vol 21 (01) ◽  
pp. 1850001 ◽  
Author(s):  
Adriana Cordis ◽  
Chris Kirby
Keyword(s):  
United States ◽  
Multinational Corporations ◽  
Tax Avoidance ◽  
The United States ◽  
Income Shifting ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Positive Correlation ◽  
Robust Evidence

We use jurisdiction-specific effective tax rates (ETRs) to investigate income shifting as an aspect of tax avoidance by U.S. firms. Our central prediction is that tax-based incentives for shifting income, as measured by the spread between domestic and foreign ETRs, should be reflected in the share of pre-tax income earned by U.S. firms in foreign jurisdictions. The data lend substantial support to this prediction. We find robust evidence of a positive correlation between the foreign share of pre-tax income and the ETR spread that is consistent with firms shifting income both into and out of the United States. The evidence also indicates that firms respond asymmetrically to positive and negative ETR spreads. Specifically, the response to a negative spread is stronger than to a positive spread of the same magnitude.

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