An alternative measure of profit shifting and corporate income tax losses

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F23%3A43924055" target="_blank" >RIV/62156489:43110/23:43924055 - isvavai.cz</a>

Výsledek na webu

<a href="https://doi.org/10.1016/j.mulfin.2023.100822" target="_blank" >https://doi.org/10.1016/j.mulfin.2023.100822</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.mulfin.2023.100822" target="_blank" >10.1016/j.mulfin.2023.100822</a>

Jazyk výsledku

angličtina

Název v původním jazyce

An alternative measure of profit shifting and corporate income tax losses

Popis výsledku v původním jazyce

The aim of this paper is to assess an alternative method of estimating the amount of profit shifting and corporate income tax revenue losses. We propose a nonstandard methodology to refine the measurement of profit shifting beyond the traditional semi-elasticity procedure. A four-stage Data Envelopment Analysis (DEA) is used to estimate the relative technical efficiency of profits before taxation reported by foreign-owned companies in Czechia. The efficiency gap resulting from the difference between the first-stage and third-stage technical efficiency scores represents the level of profit shifting. Using the statutory and average effective corporate income tax rates, we calculate the amount of corporate income tax revenue losses attributable to profit shifting. The estimated mean level of profit shifting by foreign subsidiaries involved in the manufacturing and service sectors between 2009 and 2016 is over 570 million EUR, and the mean amount of tax losses exceeds 100 million EUR. In relative terms, profit shifting leads to a decrease in total corporate income tax revenues of 2% in Czechia. Foreign-owned companies involved in the manufacturing sector are less efficient than foreign-owned companies from services industries in terms of relative technical efficiency scores, while companies involved in the service sector have a considerably high efficiency gap with respect to companies involved in the manufacturing sector.

Název v anglickém jazyce

An alternative measure of profit shifting and corporate income tax losses

Popis výsledku anglicky

The aim of this paper is to assess an alternative method of estimating the amount of profit shifting and corporate income tax revenue losses. We propose a nonstandard methodology to refine the measurement of profit shifting beyond the traditional semi-elasticity procedure. A four-stage Data Envelopment Analysis (DEA) is used to estimate the relative technical efficiency of profits before taxation reported by foreign-owned companies in Czechia. The efficiency gap resulting from the difference between the first-stage and third-stage technical efficiency scores represents the level of profit shifting. Using the statutory and average effective corporate income tax rates, we calculate the amount of corporate income tax revenue losses attributable to profit shifting. The estimated mean level of profit shifting by foreign subsidiaries involved in the manufacturing and service sectors between 2009 and 2016 is over 570 million EUR, and the mean amount of tax losses exceeds 100 million EUR. In relative terms, profit shifting leads to a decrease in total corporate income tax revenues of 2% in Czechia. Foreign-owned companies involved in the manufacturing sector are less efficient than foreign-owned companies from services industries in terms of relative technical efficiency scores, while companies involved in the service sector have a considerably high efficiency gap with respect to companies involved in the manufacturing sector.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

<a href="/cs/project/GA18-14082S" target="_blank" >GA18-14082S: Férové korporátní zdanění: Měření dopadu přesunu zisků na rozpočet České republiky</a><br>

Návaznosti

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Rok uplatnění

2023

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Journal of Multinational Financial Management

ISSN

1042-444X

e-ISSN

1873-1309

Svazek periodika

70-71

Číslo periodika v rámci svazku

December

Stát vydavatele periodika

NL - Nizozemsko

Počet stran výsledku

20

Strana od-do

100822

Kód UT WoS článku

001084776100001

EID výsledku v databázi Scopus

2-s2.0-85172320348