Tax Enforcement Using a Hybrid between Self- and Third-party Reporting
With P. Mavrokonstantis, Journal of Public Economics (Volume 203, 2021)
We study behavioural responses to a widely-used tax enforcement policy that combines elements of self- and third-party reporting. Taxpayers self-report to the tax authority but must file documentation issued by a third-party to corroborate their claims. Exploiting salary-dependent cutoffs governing documentation requirements when claiming deductions for charitable contributions in Cyprus, we estimate that deductions increase by £0.7 when taxpayers can claim £1 more without documentation. Second, using a retroactive reform, we estimate that at least 64% of the response is purely a reporting adjustment representing tax evasion. Finally, reporting rules drive the behaviour of a large group of taxpayers who display little responsiveness to financial incentives for giving
Taxing Multinationals Beyond Borders: Financial and Locational Responses to CFC Rules
Journal of Public Economics (Volume 173, 2019)
Using a large panel dataset on worldwide operations of multinational firms, this paper studies one of the most advocated anti-tax-avoidance measures: Controlled Foreign Corporation rules. By including income of foreign low-tax subsidiaries in the domestic tax base, these rules create incentives to move income away from low-tax environments. Exploiting variation around the tax threshold used to identify low-tax subsidiaries, we find that multinationals redirect profits into subsidiaries just above the threshold and change incorporation patterns to place fewer subsidiaries below and more above the threshold. Roughly half of the resulting increase in global tax revenue accrues to the rule-enforcing country.
SELECTED WORK IN PROGRESS:
The Multinational Capital Advantage
(with J. Miethe, LMU Munich ) - Early results available upon request
Tax Enforcement with Multiple Evasion Technologies
(with N. Johannesen, University of Copenhagen)
Internal Banks of Multinational Enterprises in Tax Havens
(with J. Miethe, LMU Munich)
Taxes and the Allocation of High Skill Labour within MNEs
Corporate Taxes and Economic Activity at Home and Abroad
(with J. Miethe, LMU Munich and Camille Semelet, LMU Munich and the IFO institute)
The OECD Global Anti-Base Erosion ("GloBE") proposal
(with Michael P. Devereux, François Bares, Judith Freedman, İrem Güçeri, Martin McCarthy, Martin Simmler and John Vella)
The OECD’s “Global Anti-Base Erosion” (GloBE) proposal was formally introduced in January 2019 as part of a consultation on “Addressing the Tax Challenges of the Digitalisation of the Economy” (OECD, 2019a). The main element of the proposal is an “income inclusion rule" that would tax the income of a foreign branch or a controlled entity if that income was subject to a low effective tax rate in the jurisdiction of establishment or residence” (OECD, 2019b, p.25). It gives the government of a parent company the right to tax that income – irrespective of whether that income might be considered to be generated in that country. The income inclusion rule is a form of minimum tax. Below, we consider the objectives of the GloBE proposal, and ask three questions: (i) whether the objectives are justified; (ii) whether the proposed reform achieves these objectives; and (iii) whether other possible reforms might achieve these objectives more successfully.
Oxford University, Centre for Business taxation - January 2020 Policy report.