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Profit Shifting and the Tax Response of Multinational Banks in Eastern Europe

Daniel Anarfi () and Danuše Nerudová ()
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Daniel Anarfi: Department of Accounting and Taxation, Faculty of Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic
Danuše Nerudová: Department of Accounting and Taxation, Faculty of Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2018, vol. 66, issue 3, 729-736

Abstract: The aim of the paper is to measure the amount of profit shifting within the banking sector in Eastern European countries. The paper uses firm‑level bank data from the Bankscope database of multinational subsidiary banks operating in Eastern Europe for a period of 10 years (2006-2015). An empirical analysis is performed on the panel data to identify the profit‑shifting activities of these banks. Focusing on the banking sector of Eastern European countries, which are a microcosm of the European Union, substantial evidence of profit shifting is found and confirms that banks have enhanced tax‑planning opportunities similar to firms from different jurisdictions. The paper also seeks to contribute to recommendations on how fair and sustainable taxation and social policy reforms can increase the economic stability of the EU member states.

Keywords: profit shifting; multinationals; subsidiary banks; Eastern Europe (search for similar items in EconPapers)
Date: 2018
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