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Fiscal incentives, corporate structure and financial aspects of treasury management operations

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  • Jim Stewart

Abstract

This paper presents evidence that tax policy affects corporate structure and intra-group financial flows, using a data base of Irish registered firms. How MNC’s corporate structure and financial flows react to tax policy is complex. Fiscal incentives play a key role in Irish industrial policy. The paper examines certain financial characteristics of financial subsidiaries (those managing group treasury functions) in Ireland. These characteristics are a tax haven connection, high ratios of revenues to pre-tax profits (in some cases greater than 100%), high intra-group borrowing or lending, large gross assets (in excess of ⋲500 million) and low or zero employment. While these firms pay corporation tax in Ireland (at reduced rates), there is considerable loss to other exchequers. The paper concludes that such tax haven type activities are unlikely to remain a viable part of future industrial policy in Ireland.

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  • Jim Stewart, 2005. "Fiscal incentives, corporate structure and financial aspects of treasury management operations," Accounting Forum, Taylor & Francis Journals, vol. 29(3), pages 271-288, September.
    • Handle: RePEc:taf:accfor:v:29:y:2005:i:3:p:271-288
    DOI: 10.1016/j.accfor.2005.03.001
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    Cited by:

    1. Hasseldine, John & Morris, Gregory, 2013. "Corporate social responsibility and tax avoidance: A comment and reflection," Accounting forum, Elsevier, vol. 37(1), pages 1-14.
    2. Ronen Palan, 2012. "Tax havens," Chapters, in: Jan Toporowski & Jo Michell (ed.), Handbook of Critical Issues in Finance, chapter 41, pages i-ii, Edward Elgar Publishing.
    3. Richard Phillips & Hannah Petersen & Ronen Palan, 2021. "Group subsidiaries, tax minimization and offshore financial centres: Mapping organizational structures to establish the ‘in-betweener’ advantage," Journal of International Business Policy, Palgrave Macmillan, vol. 4(2), pages 286-307, June.
    4. Stewart, Jim, 2008. "Financial flows and treasury management firms in Ireland," Accounting forum, Elsevier, vol. 32(3), pages 199-212.

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