Country-By-Country Reporting (CBCR) As a Tool For Identifying Patterns of Profit Shifting by Multinationals

The paper is devoted to analysing a database of CbCRs, which was developed as part of the AITAX13 project of the University of Luxembourg, and covers over 150 MNEs to identify patterns of profit shifting and aggressive tax planning. Several quantitative indicators were used for this reason, including effective tax rates, profit per employee, the share of profits declared in countries without employees, ultra-high pre-tax profit margins (exceeding 50%), and the share of total corporate profits taxed at rates below 15%. It was found that, based on these characteristics, many corporations transfer significant amounts of profits to low-tax jurisdictions where the presence of real economic activity is minimal. The findings confirm the effectiveness of CbCR reports as a tool for increasing transparency and detecting aggressive tax planning, consistent with the findings of recent studies and OECD estimates.