Conference Agenda

We extend research on the impact of BEPS Action 13 on profit-shifting behavior to include the role of the master file and local file (MFLF). Our evidence from confidential tax return data from The Indonesia Tax Authority shows that firms obligated to submit the MFLF have lower taxable income than firms that do not submit the documents. Reflecting its impact on firms, it indicates that firms continue profit-shifting behavior. Furthermore, we provide evidence of channeling profit-shifting through intra-group transactions, such as sales and purchases, payment of debt and service remuneration via related-party transactions. The outcomes provide valuable insights into profit-shifting behavior vis-à-vis private disclosure within emerging countries, offering pertinent information for accounting researchers and tax authorities.

In general, special tax regimes create inefficiencies and might destroy horizontal equity, Additionally, they also create opportunities to hide income and avoid taxes.

To study the magnitude of tax avoidance of special tax regimes in Chile and their effects on horizontal equity, I use administrative data from the Chilean IRS to simulate a tax reform that replaces them with a cash flow tax for small firms.

The results show that a reform of this type would have positive effects, especially in terms of horizontal tax equity as 85.6% of the profits from firms under presumptive taxes and 77.6% of the profits from the small firms under special tax regimes, belong to taxpayers in the top income decile.

Using administrative tax data from the Uganda Revenue Authority, this study shows as one of the first in a developing country setting that multinational corporations (MNCs) lower their corporate tax burden through two channels: lower effective tax rates and profit-shifting. MNCs pay an approximately 20 percentage points lower effective tax rate on their reported profits than large domestic corporations because of tax treaties and other benefits. However, they are also more likely to report losses than domestic firms. This is likely due to profit-shifting, as the lower the tax rate in the country of the global ultimate owner, the lower the reported profit of the affiliate in Uganda. Estimating effective tax rates in three alternative ways in combination with a profit-shifting analysis provides new insights on the stage at which tax revenues are forgone and methodologically highlights the possibilities of using administrative tax data for evidence-based policy making.

In this study, we examine the impact of Uganda’s transition from Thin Capitalization Rules (TCR) to Earnings Stripping Rules (ESR) in 2018 on corporate profit shifting behaviour. Our preliminary findings suggest that the adoption of ESR led to a significant decrease in both the leverage and interest expenses of treated companies. Notably, this shift was associated with a decline in real economic activity with both sales and investment going down after the reform. Despite these reductions, the ESR regime enabled Uganda to generate higher revenue compared to the TCR system. Additionally, our analysis indicates that ESR specifically targets firms with high leverage relative to earnings, in contrast to

TCR, which focuses on companies utilizing debt financing over equity financing.