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The Interplay Between Tax Havens, Geographic Disclosures and Corporate Tax Avoidance: Evidence from European Union

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  • Kobbi-Fakhfakh Sameh

    (Research Unit: URAMEF, Department of Accounting and Law, High Business School of Sfax, Sfax University, Sfax, Tunisia)

Abstract

This study examines the interplay between tax haven use, geographic disclosures and corporate tax avoidance. Based on a panel of 497 non-financial EU listed firms during the period 2006–2012, we provide evidence that corporate groups with affiliates in tax havens tend to have lower effective tax rates and lower geographic disclosures fineness scores. We, also, find a positive association between geographic disclosures fineness scores and the firms’ effective tax rates. We, further, find that the negative association between tax haven use and the effective tax rate is more pronounced for firms disclosing geographic information at a more aggregated level, showing a moderating effect of geographic disclosures fineness on such association. Our findings are based upon hand-collected data on corporate geographical dispersion, and corroborated by several additional and robustness tests. The research results should be of concern to policymakers and others interested in multinational companies’ segment reporting practices and tax planning activities.

Suggested Citation

  • Kobbi-Fakhfakh Sameh, 2023. "The Interplay Between Tax Havens, Geographic Disclosures and Corporate Tax Avoidance: Evidence from European Union," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 13(4), pages 417-456, November.
    • Handle: RePEc:bpj:aelcon:v:13:y:2023:i:4:p:417-456:n:1
    DOI: 10.1515/ael-2021-0008
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    More about this item

    Keywords

    tax havens; geographic disclosures fineness; aggregation level; corporate tax avoidance; tax burden; effective tax rate; country-by-country reporting;
    All these keywords.

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • H - Public Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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