Companies use different methods and techniques to transfer taxable profits to tax havens. The paper aims at analysing the influence of the relocation of the registered office of Slovak companies in tax havens in relation to the leverage ratio and the ratio of debt per sales and to verify the use of debt by Slovak firms in the transfer of profits. In evaluating these indicators, we chose two approaches. We first analysed the change of indicators only for those firms that transferred their seat to lower tax jurisdiction. The analysis is complemented by a different view, when the selected indicators are compared to a group of businesses with a link to tax havens and with no link to tax havens. Our empirical results clearly indicate the tendency that firms in Slovakia benefit from the possibility of transferring profits to lower tax jurisdictions via debt channels. The median values of debt ratio after the transfer of the registered office to tax havens increased by 7.8%. The median value of the tracking indicator is 1.2 times higher for firms with tax haven links than for companies without links to tax havens.
Motives of Establishing of New Onshore and Off shore Companies by the Slovak Enterprises in 2014We contribute to the rare evidence of driving motives of establishing new onshore and off shore companies by analysing the situation in the Slovak Republic in 2014. We analyse fi nancial and ownership data for the Slovak enterprises already included in onshore and off shore business, providing data by corporate service providers on the driving motives and their combination for the Slovak customers in 2014 and the available external data assessing the quality of the Slovak business environment. We present the empirical evidence that the motive of tax benefi ts is ranked as the most important, followed by the anonymity of the UBO, fl exible arrangement of ownership relations, asset protection, asset management and trusteeship and special cases. In the second part of our research we provide empirical evidence on signifi cant areas of the business environment aff ecting the number of newly established onshore and off shore companies by the Slovak enterprises between 2005 and 2014. The indicators assessing the quality of the Slovak business environment are divided into two groups -paying taxes plus doing business and the quality of the legal system in Slovakia. Our research shows that from the fi rst group is insignifi cant only the indicator of time to comply with taxes. On the other side, the perception of corruption and the functionality of the state institutions are evaluated as signifi cant from the second group. Medzi najčastejšie motívy využívania daňových rajov patria daňové úspory. Kategó-ria daní (medzinárodné daňové plánovanie a medzinárodná daňová optimalizácia) je skúmaná z viacerých uhlov. Podľa niektorých autorov (napr. Graham, Tucker, 2006; Dharmapala, 2008;Minnick, Noga, 2010)
The main aim of this paper is to provide empirical evidence about profit-shifting to selected tax havens by Slovak companies. This contribution focused on the very rare evidence of use of tax havens by Slovak companies not only in the field of corporate income tax, but also in selected areas of profitability. Two sources of data were used. Lists of Slovak companies with tax haven links were provided by the company, Bisnode, and financial statements of investigated companies were gained from the Finstat database. Based on the available data, the investigated period was between 2008 and 2016. We statistically tested selected indicators (ETR, taxes per assets, ROE, ROA, and ROS) of Slovak companies with direct ownership links to tax havens compared to their counterparts. Our findings suggest that Slovak companies with an ownership link to tax havens pay significantly lower taxes compared to companies without ownership links to tax havens during the period monitored. The aggressive tax planning was not only confirmed by the significantly lower reported values of ETR and taxes per assets, but also by the lower values of ROA. On the one side, Slovak companies with ownership links to midshore tax havens had the highest values of ROE, ROA, and ROS, but on the other side, these Slovak companies reported the highest ETR among the appointed categories (onshore, midshore, and offshore). The lowest taxes paid per unit of total assets were found in Slovak companies with ownership links to onshore tax havens. The analysis was supplemented by the changes of the selected indicators before and after obtaining an ownership link to a tax haven.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.