Country-by-country reporting : tension between transparency and tax planning

Evers, Maria Theresia ; Meier, Ina ; Spengel, Christoph

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URL:	https://ub-madoc.bib.uni-mannheim.de/42001
URN:	urn:nbn:de:bsz:180-madoc-420013
Dokumenttyp:	Arbeitspapier
Erscheinungsjahr:	2017
Titel einer Zeitschrift oder einer Reihe:	ZEW Discussion Papers
Band/Volume:	17-008
Ort der Veröffentlichung:	Mannheim
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Betriebswirtschaftslehre > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel 2006-) Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC-Schriftenreihe:	Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Fachgebiet:	330 Wirtschaft
Fachklassifikation:	JEL: H20, H26, F23, K34, M41,
Freie Schlagwörter (Englisch):	tax avoidance , profit shifting , multinational firms , tax reform , tax reporting , country-by-country reporting , international transfer pricing
Abstract:	Aggressive tax planning efforts of highly profitable multinational companies (Base Erosion and Profit Shifting (BEPS)) have become the subject of intense public debate in recent years. As a response, several international initiatives and parties have called for more transparency in financial reporting, especially by means of a Country-by-Country Reporting (CbCR). In line with that, the OECD and the European Commission have recently presented proposals for a comprehensive disclosure of country-specific tax -related information for companies in all industry sectors. In our paper, we demonstrate that neither consolidated or individual financial statements nor other existing data sources seem to be an appropriate basis for providing such country-specific information. Instead, it would be necessary to define detailed and harmonized definitions and regulations to ensure comparability. The discussion on benefits and costs of a CbCR reveals that benefits (at least partially) lack a theoretical foundation and, overall, do not seem to outweigh associated costs. This holds true, in particular, since current tax planning activities are mainly based on the legal exploitation of gaps and loopholes in national and international tax law. Instead, we argue that tax legislators should limit profit shiting by enforcing tax rules and by closing gaps in tax law. In particular, we call for more tightened and standardized transfer pricing regulations and thin-cap rules to be adopted at an international level.