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Jurisdictions with lowest effective tax rates in the post-BEPS landscape - CbCR evidence and implications

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  • Petr Procházka

Abstract

The research revolves around the topic of offshore destinations and role of tax in the decision where to locate TNCs' investments or relocate employees. This paper exploits rich country-by-country reporting (CbCR) data that banking institutions operating in the EU with annual turnover over 750 million are obliged to provide publicly as of 2014 on a yearly basis. Database includes 47 banks over 5 years and 27,533 datapoints. I explore whether there is any connection between effective tax rate (ETR) and number of employees in respective subsidiaries of banking institutions. In consequent multiple regression analysis, I add more variables to the model: such as profitability, labour productivity, and other controlling variables. Conclusion is that there is no significant correlation between ETR and employee count and that TNCs tend to locate their employees on a different basis. This is a unique analysis of data that can be used by other tax avoidance researchers and policy makers.

Suggested Citation

  • Petr Procházka, 2020. "Jurisdictions with lowest effective tax rates in the post-BEPS landscape - CbCR evidence and implications," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2020(1), pages 33-52.
    • Handle: RePEc:prg:jnlefa:v:2020:y:2020:i:1:id:231:p:33-52
    DOI: 10.18267/j.efaj.231
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    Cited by:

    1. Petr Prochazka & Iveta Cerna, 2022. "Reinvestment and effective corporate income tax rates in V4 countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(3), pages 581-605, September.

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    More about this item

    Keywords

    Effective tax rate; International tax optimisation; Global mobility; Offshoring; FDI;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • 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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