How Did Anti-tax Avoidance Measures Affect ETRs and Profit Shifting?

Kurzfassung/Abstract

This study examines the impact of anti-tax avoidance measures on the effective tax rates (ETR) and profit shifting activities of Multinational enterprises (MNEs) across several key countries. It employs a two-pronged approach to evaluate the effectiveness of the base erosion and profit shifting (BEPS) Actions 3 and 13 in particular. First, the study analyses the generally accepted accounting principles (GAAP) ETRs of large listed firms. Second, the data from tax reconciliation is utilized to investigate ETR items. The findings show a significant increase in ETRs since 2017 which suggests a reduction in profit shifting due to implementing CbCR and controlled foreign company (CFC) rules. However, the effectiveness of these measures in terms of profit shifting varies across countries. France and Germany have demonstrated substantial improvements while Sweden has exhibited positive but volatile results. In contrast, Switzerland and the United Kingdom have presented outcomes that are more complex and nuanced. The study highlights the necessity for continuous fiscal vigilance and implementing adaptive tax policies in order to effectively combat tax avoidance.