Profit-shifting from Czech multinational companies to European tax havens

Jánský, Petr; Kokeš, Ondřej

doi:10.1080/13504851.2015.1137543

Cited by 33 publications

(19 citation statements)

References 9 publications

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“…The ETR median value before 2015 was 0 and taxes were paid mostly by large companies. The results of our analysis are very similar to the findings on the ETR by many authors who conducted investigations in this field [2,7,32,40,42,43].…”

Section: Discussionsupporting

confidence: 90%

“…Another study of Slovak companies regarding the use of tax havens was conducted by Khouri et al [6], who created a model of an international corporate structure and derived a formula, which can be used to calculate the break-even point in onshore and offshore businesses in regards to taxation. Janský and Kokeš [7] ascertained that tax havens are not limited only to tiny tax havens (tropical islands) and may be found among European countries. Their company-level analysis suggested that profit shifts through debt financing from the Czech Republic to Luxembourg, Switzerland and to a lesser extent, the Netherlands.…”

Section: Literature Review and Theoretical Considerationsmentioning

confidence: 99%

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A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity

et al. 2019

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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.

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Section: Discussionsupporting

confidence: 90%

Section: Literature Review and Theoretical Considerationsmentioning

confidence: 99%

A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity

et al. 2019

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“…in the dataset of entities without the link to tax havens and in the dataset of entities with the link to tax haven), namely I B , I C , I E , I F , I G , I H and I I (for more details see Table ). Further, based on current research (Janský & Kokeš, , ) the indicators I A and I D were added. In respect of indicators used, we analysed profitability per unit of assets, tax per unit of assets or per unit of profit before tax, operating revenue per unit of profit before tax, operating costs per unit of operating revenue and indebtedness per unit of assets of per unit of shareholders’ funds in both sub‐datasets of entities with aim to identify differences and subsequently to estimate profit shifting.…”

Section: Methodsmentioning

confidence: 99%

International tax planning within the structure of corporate entities owned by the shareholder‐individuals through Panama Papers destinations

Nerudová

Solilová

Litzman

et al. 2019

Development Policy Review

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Motivation The Panama Papers scandal highlighted the scale of financial secrecy, anonymous ownership and shell companies and their role in profit shifting and tax avoidance. We show the importance of international tax planning within the structure of corporate entities owned by shareholder‐individuals through Panama Papers destinations. Purpose To identify profit‐shifting channels and to estimate related government revenue losses to European Union Member States. Methods Using company data from the Amadeus/Orbis database (Bureau Van Dijk, n.d.a, n.d.b), we applied micro‐data analysis to the financial statements of multinational companies (MNEs) owned by shareholder‐individuals. Two groups—one with and the other without links to Panama Papers tax havens—alongside an analysis of profit‐shifting indicators. Findings Profit is generally shifted by moving operating revenues or costs, though the use of debt channels is also important. Also, groups linked to tax havens pay significantly less tax per unit of profit before tax, and require less operating revenue to achieve higher profits. Finally, related government revenue losses were assessed at EUR 8.67 billion. Policy implication Our results are relevant to the European Commission’s Comprehensive Common Consolidated Corporate Tax Base (CCCCTB) as it aims to counter profit shifting out of the European Union (EU) into tax havens. Further, our research highlights the importance of setting up registries of ultimate beneficiary owners in EU Member States.

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“…Some authors analyze profit transferring by testing multinational companies' ownership links to lower tax jurisdictions rather than to groups of them (e.g. Janský & Kokeš, 2016). Classification of jurisdictions, respectively tax havens, is the most common in both academic and professional literature on onshore and offshore jurisdictions.…”

Section: Methodology and Datamentioning

confidence: 99%

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

Ištok

Kanderová

2019

Technological and Economic Development of Economy

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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.

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Profit-shifting from Czech multinational companies to European tax havens

Cited by 33 publications

References 9 publications

A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity

A Study from Slovakia on the Transfer of Slovak Companies to Tax Havens and Their Impact on the Sustainability of the Status of a Business Entity

International tax planning within the structure of corporate entities owned by the shareholder‐individuals through Panama Papers destinations

Debt/Asset Ratio as Evidence of Profit-Shifting Behaviour in the Slovak Republic

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