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The long way to tax transparency: lessons from the early publishers of country-by-country reports

Author

Listed:
  • Sarah Godar

    (DIW Berlin and EU Tax Observatory)

  • Giulia Aliprandi

    (Paris School of Economics and EU Tax Observatory)

  • Tommaso Faccio

    (Nottingham University Business School)

  • Petr Janský

    (Charles University)

  • Katia Toledo Ruiz

    (Université de Namur and Université Catholique de Louvain)

Abstract

In this paper, we analyse a sample of voluntarily published country-by-country reports (CbCRs) of 35 multinational enterprises (MNEs). We assess the value added and the limitations of qualitative and quantitative information provided in the reports based on a comparison to individual MNEs’ annual financial reports and aggregate CbCR data provided by the OECD. In terms of data quality, we find that the inclusion of intra-company dividends and equity-accounted profits are a minor concern on average but that for individual MNEs corrections might be substantial. Our sample MNEs seem to pay higher effective tax rates than the global average and many of them report relatively little profit in tax havens. We only find a very weak correlation of the location of profits and effective tax rates. This might indicate that more tax transparent MNEs avoid taxes less aggressively. However, our assessment of different tax risk indicators reveals important variations between companies.

Suggested Citation

  • Sarah Godar & Giulia Aliprandi & Tommaso Faccio & Petr Janský & Katia Toledo Ruiz, 2024. "The long way to tax transparency: lessons from the early publishers of country-by-country reports," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(2), pages 593-634, April.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:2:d:10.1007_s10797-023-09818-5
    DOI: 10.1007/s10797-023-09818-5
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    More about this item

    Keywords

    Multinational corporation; Country-by-country reporting; Effective tax rate; Profit shifting; Tax haven;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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