TY - JOUR

T1 - Tax Havens and Effective Tax Rates: An Analysis of Private versus Public European Firms

AU - Thornton, J.S.

AU - Jaafar, A.

PY - 2015/12/1

Y1 - 2015/12/1

N2 - We examine the impact of tax-haven operations on the effective corporate tax burdens of publicly listed and privately held firms domiciled in Europe. In particular, we consider how European firmsÕ tax haven operations interacts with factors such listing status and home-country tax reporting systems to determine the relative tax burdens of publicly listed and private firms. Our main empirical results show that tax haven operations is associated with lower effective tax rates for both private and public firms, and that the impact of tax havens in lowering effective tax rates is more pronounced for private firms than for public firms.Home country characteristics are also important determinants of effective tax rates for both private and public firms with tax havens. Given that firms, regardless of their listing status, use tax havens as tax avoidance mechanism in lowering tax burdens, regulatory and tax enforcement bodies should focus not only on public firms but also on private firms.

AB - We examine the impact of tax-haven operations on the effective corporate tax burdens of publicly listed and privately held firms domiciled in Europe. In particular, we consider how European firmsÕ tax haven operations interacts with factors such listing status and home-country tax reporting systems to determine the relative tax burdens of publicly listed and private firms. Our main empirical results show that tax haven operations is associated with lower effective tax rates for both private and public firms, and that the impact of tax havens in lowering effective tax rates is more pronounced for private firms than for public firms.Home country characteristics are also important determinants of effective tax rates for both private and public firms with tax havens. Given that firms, regardless of their listing status, use tax havens as tax avoidance mechanism in lowering tax burdens, regulatory and tax enforcement bodies should focus not only on public firms but also on private firms.

U2 - 10.1016/j.intacc.2015.10.005

DO - 10.1016/j.intacc.2015.10.005

M3 - Article

VL - 50

SP - 435

EP - 457

JO - International Journal of Accounting

JF - International Journal of Accounting

SN - 0020-7063

IS - 4

ER -