Profit shifting to tax havens: Withholding tax impact on passive flows from Poland

IF 1.6 Q3 BUSINESS Transnational Corporations Review Pub Date : 2024-03-22 DOI:10.1016/j.tncr.2024.200059
Milena Sitkiewicz , Anna Białek-Jaworska
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Abstract

This paper aims to identify determinants and channels of tax avoidance through passive flows to tax havens using harmful tax competition, considering the effect of changes in withholding tax regulations. For the empirical analysis, we exploit the data of 110 ​907 nonresidents from 134 countries that gain passive flows paid by Polish taxpayers. We utilise data from IFT-2R returns on withholding tax (WHT) for 2012–2019. We use a two-stage Arellano-Bond estimator of the Generalised Method of Moments (GMM) with instrumental variables for dynamic panel data and the difference-in-differences method. We show that the amendment to the withholding tax legislation, preceded by a no-avoidance clause in 2017, reduced passive flows overall and separately from the manufacturing and service sectors, primarily profit-shifting through interest, royalties and intangible services payments. Moreover, our results confirm that the tax system tightening against aggressive tax competition has reduced passive income transfers from service companies, not manufacturing companies. Instead, the latter make higher transfers to tax havens included in both Polish and the E.U. list of countries applying harmful tax competition.

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利润向避税地转移:预提税对波兰被动资金流动的影响
本文旨在考虑预扣税法规变化的影响,利用有害的税收竞争,确定通过被动流向避税地进行避税的决定因素和渠道。在实证分析中,我们利用了来自 134 个国家的 110 907 名非居民的数据,这些数据获得了波兰纳税人支付的被动资金流。我们利用的数据来自 2012-2019 年预扣税(WHT)的 IFT-2R 报表。我们使用带工具变量的动态面板数据广义矩法 (GMM) 的两阶段 Arellano-Bond 估计器和差分法。我们的研究表明,预扣税立法修正案(在 2017 年之前有一个无避税条款)减少了制造业和服务业的被动流动,主要是通过利息、特许权使用费和无形服务支付进行的利润转移。此外,我们的研究结果证实,针对激进税收竞争的税制收紧减少了来自服务公司的被动收入转移,而不是来自制造业公司的被动收入转移。相反,后者向波兰和欧盟实施有害税收竞争的国家名单中的避税地转移了更多的收入。
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来源期刊
CiteScore
5.20
自引率
5.70%
发文量
37
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