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This thesis aims to advance our understanding of corporate taxes and their effects on firm behaviour, particularly with regard to tax avoidance and investment, as well as how countries fight tax evasion and avoidance. Each chapter provides a distinct contribution to the corporation tax literature. The first two chapters analyze the corporate tax payments of companies residing in the United Kingdom using confidential corporate tax returns data. Chapter 1 focuses on comparisons between various company-ownership types, distinguishing in particular between multinational and domestic companies. I find that multinational companies, in spite of constituting only 3 percent of the population of UK companies, pay the majority of UK corporation tax, around 55 percent on average, during the period 2000 - 2011. However, multinational companies pay a very small amount of tax relative to their size, in comparison to domestic companies, and the share of UK corporation tax paid by multinational companies has declined over the period. Chapter 2 shows that there are systematic differences in how much taxable profits multinational and domestic companies report. Specifically, using comparable samples selected by propensity score matching, I estimate that UK subsidiaries of foreign multinationals report a 50 percent lower ratio of taxable profits to total assets than comparable domestic standalones. This difference is almost entirely attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits (59.2 percent) than domestic standalones (27.5 percent). A high share of foreign multinational subsidiaries are found to report zero taxable profits persistently over time, and high leverage is found to play an important role in producing this outcome. This suggests a very aggressive form of profit shifting for many of these foreign multinational companies. Chapter 3 investigates how investment responds to tax incentives. In particular, using the announcement and subsequent implementation of an exogenous tax reform in Canada as a quasi-natural experiment, I consider the effect of a temporary and unexpected increase in the cost of capital for a group of firms (income trusts) which had (for tax reasons) limited availability of retained earnings as a source of finance for investment. I show that these firms did not respond to the cost of capital increase during the period when they had limited availability of retained earnings. In turn, a subsequent increase in the availability of internal finance, prompted by the implementation of the tax reform in 2011, is shown to increase their investment substantially. These findings suggest that financing constraints on investment may have been binding for these firms. Chapter 4 discusses the exchange of tax information between tax havens and OECD countries. Together with Clemens Fuest, we analyze how tax havens have chosen their partner countries to sign tax information exchange agreements (TIEAs) with and hence comply with OECD standards. We find that tax havens have on average signed more TIEAs with countries to which they have stronger economic links. However, this does not mean that they exchange tax information with all important partner countries.

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A major goal of the EU Commission in the area of direct taxation is the introduction of a common consolidated corporate tax base (CCCTB) in Europe. While hardly discussed in the literature, such a system would limit national discretion over tax depreciation. In a sample of up to 47 countries, we find that the probability of a tax reform that improves the depreciation allowances increases, if the macroeconomic situation is weak. This suggests that changes in depreciation allowances are used as a fiscal instrument for stabilization. A common consolidated tax base deprives national governments from implementing investment incentives via accelerated depreciation. This paper discusses the possible implementation of a hybrid system that combines features of formula apportionment and separate accounting. Such a hybrid system may substantially mitigate transfer pricing problems and other tax planning issues, whilst preserving national discretion over depreciation allowances. / Series: WU International Taxation Research Paper Series

This paper examines the determinants of tax lobbying report compliance and issues lobbied. Disclosure rules under the Lobbying Disclosure Act of 1995 and Honest Leadership and Open Government Act of 2007 require lobbyists to disclose the issues on which they lobby the U.S. federal government. Despite these disclosure rules, I find substantial variation in the level of compliance with the Act related to tax issues. Using a hand-collected dataset of corporate tax lobbying reports, I find that only 68.4% of these reports are fully compliant with the Act, on average. Notably, the percentage of compliant tax lobbying reports has declined significantly over time, from almost 90% compliance in 2008 to less than 50% compliance by 2017, with some rebound to about 60% by 2019. I find greater compliance when lobbying reports are filed by in-house lobbyists, by revolving door lobbyists, for lobbying activity related to the Department of the Treasury, later in the year, and with a higher tax lobbying dollar amount, and lower compliance for larger firms. Additionally, I identify that the major tax issues lobbied relate to international taxes, investment incentives, and non-income taxes. I find that lobbying reports that mention either international taxes or investment incentives are more likely to have a higher tax lobbying dollar value, suggesting they are more valuable to corporations than non-income taxes. Overall, this paper provides detailed evidence on firms’ compliance with federal disclosure laws related to tax lobbying, the nature of tax issues being lobbied, and the role of lobbyists in advocating for those issues.

Using confidential corporate income tax return data, this paper investigates the association between book-tax non-conformity (measured as book-tax differences) and tax-loss carryforwards (TLCFs). I find that TLCFs are positively associated with temporary and permanent book-tax differences. Only firms with positive pre-tax book income and negative taxable income (double-picture firms) drive the positive association between TLCFs and temporary book-tax differences. Conversely, the positive association of TLCFs and permanent book-tax differences is present for double-picture firms and the remaining firms. The results suggest that double-picture firms, which feature high TLCFs compared to their size and to the remaining firms, use temporary book-tax differences to report a lower taxable income than pre-tax book income. Thus, this paper contributes to the understanding of the drivers of rising TLCFs. This is important, as offsetting TLCFs against future profits jeopardizes a country's tax revenue. (author's abstract) / Series: WU International Taxation Research Paper Series

The choice of corporate finance is an important source of tax planning opportunities for multinational companies. Investing companies have to be aware of inconsistent tax classification of equity and debt between countries in particular. Additionally, thin capitalization rules have to be taken into account. In response to changing corporate needs the present paper focuses on the tax consequences of hybrid financial instruments. Only some literature exists on cross-border hybrid finance. Especially the linkage between the two areas - hybrid finance and thin capitalization - both on a national and international level had to be dealt with academically. The paper analyses the substantive scope of thin capitalization regimes in general and in detail. The main finding is that the tax consequences of hybrid instruments reverse when used in thin capitalization situations and that traditional tax policy has to be reconsidered. (author's abstract) / Series: Discussion Papers SFB International Tax Coordination

The diploma thesis focuses on the concept of CCCTB, its historical development and the application of the allocation formula for the division of the common consolidated corporate tax base. At the beginning is the attention paid to coordination and harmonization within the European Union. Subsequently, the work is concerned with the proposal itself. It describes proposal from 2011 and its methods for determining the tax base, its consolidation and its distribution among the members of the group. The 2011 proposal is compared with two new proposals from 2016 - the CCTB and the CCCTB. More detailed descriptions of significant differences are described. The last chapter of the thesis then calculates the distribution of the consolidated base in the conditions of the selected company.

This thesis analyzes the effect of corporate tax rates on the purchasing-power-parity (PPP) doctrine. The data used to test this hypothesis are drawn from the U. S., the U. K., the Federal Republic of Germany, Canada, and Japan. The first chapter introduces the reader to the concepts of the PPP doctrine and states the hypothesis. Chapter 2 reviews the literature on the PPP doctrine. Chapter 3 specifies a model of the PPP doctrine including tax rates. Chapter 4 reports and interprets the findings. The study is summarized and conclusions are drawn in chapter 5. In this study it is shown that tax rates are significant only in the case of the U. S. dollar/Canadian dollar exchange rate.

Este trabalho procura desenvolver um modelo de tributação da renda gerada pelas empresas com base em fluxos de caixa realizados, ao invés da base lucro em regime competência, mas na óptica dos conceitos contábeis. Além disso, procura analisar as implicações do modelo sobre os custos de conformidade, sobre a capacidade de pagamento, a interferência das normas tributárias sobre os princípios contábeis e a arrecadação. No desenvolvimento do modelo, procurou-se verificar quais são os fluxos de caixa tributáveis, os não-tributáveis, o tratamento a ser dado às movimentações virtuais de caixa e à inflação. Para isso, foram levantados e analisados as teorias e conceitos que suportam esse desenvolvimento. Com o modelo elaborado, foram analisadas suas implicações. Verificou-se que o modelo pode reduzir custos de conformidade tanto do lado do contribuinte, como do fisco, principalmente em função da maior facilidade de apuração; que o contribuinte pode aumentar sua capacidade contributiva, tanto do ponto de vista financeiro como econômico; que permite uma redução da interferência das normas tributárias sobre a elaboração das demonstrações contábeis; e, por último, que a arrecadação pode até ser equivalente à obtida com a tributação baseada no lucro, apesar de ser menos regular. / This thesis aims to develop a business income taxation based on realized cash flows model, instead of profit basis, but by the point of view of accounting concepts. Moreover, it attempts to analyze the implications of model upon compliance costs, contribution ability, interference of tax rules on accounting principles and upon collecting tax. On model development, was make an effort to verify which are the taxable cash flows, the non-taxable, virtual cash flows and inflation treatment. Toward, we review and analyze theories and concepts that support this development. Following the arranged model, was analyzed its implications. We verified that the model can reduces compliance costs, such taxpayer side as public revenue side, mainly because of major evaluation simplicity; that the taxpayer can have his contribution ability increased, financially and economically; that permits a reduction of interference of tax rules on accounting principles; and for last, that collecting tax can be up to equivalent as achieved with profit tax basis, even less regular.