Effects of corporate transparency on tax avoidance: evidence from country-by-country reporting

Tijmen Tuinsma*, Kristof De Witte, Petr Jansky, Miroslav Palansky, Vitezslav Titl

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

Since 2016, multinationals with a revenue over <euro> 750 million have to submit country-by-country reports to tax authorities to deter tax avoidance. Using a regression discontinuity design, we provide evidence for an increase in affected multinationals' effective tax rates. However, the most aggressive multinationals with known tax haven presence were only moderately affected. The effect is mainly driven by medium-aggressive firms, which achieved low effective tax rates without tax haven affiliates to shift profits to. The policy was thus effective in combating some tax avoidance but profit shifting to tax havens remains an issue, explaining the push for further policy measures including the global minimum corporate tax rate.
Original languageEnglish
Number of pages33
JournalInternational Tax and Public Finance
DOIs
Publication statusE-pub ahead of print - 1 Feb 2025

JEL classifications

  • f23 - "Multinational Firms; International Business"
  • h25 - Business Taxes and Subsidies including sales and value-added (VAT)
  • h26 - Tax Evasion

Keywords

  • Country-by-country reporting
  • Corporate tax avoidance
  • Tax havens
  • Financial transparency

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