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Consumption taxes and corporate tax planning - evidence from European service firms
Werner, Ann-Catherin
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Olbert, Marcel
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Dokumenttyp:
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Präsentation auf Konferenz
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Erscheinungsjahr:
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2019
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Veranstaltungstitel:
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Hawaii Accounting Research Conference 2019
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Veranstaltungsort:
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Honolulu, HI
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Veranstaltungsdatum:
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03.-05.01.2019
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Sprache der Veröffentlichung:
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Englisch
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Einrichtung:
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Fakultät für Betriebswirtschaftslehre > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel 2006-)
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Fachgebiet:
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330 Wirtschaft
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Fachklassifikation:
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JEL:
H22 , H24 , H25 , H32 , M48,
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Freie Schlagwörter (Englisch):
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Consumption Taxes , Tax Planning , Profit Shifting
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Abstract:
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Consumption taxes are a primary source of tax revenue and, against the common intuition, firms
might bear the respective tax burden. However, it is largely unknown how firms respond to
consumption taxes. We examine whether service firms in Europe respond to consumption taxes
and whether managing sales as the respective tax base is interrelated with subsequent income
tax-motivated profit shifting. We exploit corporate affiliate-level panel data and a unique setting
in Europe over the period 2007-2015 with 72 staggered and plausibly exogenous consumption
and corporate income tax rate changes. We find that firms, on average, exhibit a negative valueadded
tax-rate semi-elasticity of reported sales of around 0.5. Consistent with theory and incentives
from the European value-added tax system, the effect is stronger for firms with greater
discretion over the jurisdiction of value-added tax liability (firms in the digital service sector)
and firms facing greater demand elasticity. We then show that the extent and the channels of
profit shifting depend on firms’ responsiveness to consumption taxes consistent with managing
sales in response to consumption taxes placing a constraint on manipulating transfer prices for
intra-group trade. Our study thereby provides novel insights for the design of multidimensional
tax systems.
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