Country-by-Country Reporting and the Effective Tax Rate: How Effective Is the Effective Tax Rate in Detecting Tax Avoidance in Country-by-Country Reports?

• Autores: Paul Klaassen, Arco Bobeldijk
• Localización: Intertax, ISSN 0165-2826, Vol. 47, Nº. 12, 2019, págs. 1057-1069
• Idioma: inglés
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• Resumen

  • A low effective tax rate in combination with a high profit can be an important indicator of possible tax avoidance. In this article, we will discuss the limitations of the definitions of two columns in the country-by-country report, namely ‘profit (loss) before income tax’ and ‘income tax accrued – current year’. We will conclude that the effective tax rate calculated based on the country-by-country report can not be accurately used in high level risk analyses.