Exploring the drivers behind tax base erosion: evidence from Poland’s banking sector

Anna Białek-Jaworska, Renata Karkowska, Jakub Chowaniec and Bartłomiej Żmudzki

Post-Communist Economies, 2026, vol. 38, issue 3, 271-296

Abstract: Effective tax policies must adapt to the ever-evolving strategies employed in global tax planning. This paper emphasises the importance of ongoing improvements to ensure sustainable taxation in a dynamic economic landscape. We broaden our understanding of the banking sector’s profit-shifting scale and identify its determinants. We apply panel data modelling to bank-level and administrative tax data of withholding taxed payments to non-residents in Poland. We note that international tax differences cause a geographical distribution of profits in banks, with low-tax jurisdictions attracting disproportionately high profits. Banks with varying sizes of assets and credit risks take different tax responses. Furthermore, we identify significant tax, regulatory, and macroeconomic drivers in banks’ reported profit shifting. We provide insights into how enhanced tax regulation measures can influence risk management, particularly in regions with developing financial markets. Furthermore, this research highlights the critical role of international cooperation in creating a more equitable tax landscape.

Date: 2026
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DOI: 10.1080/14631377.2025.2596235

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