THE EFFECTS OF NEWLY INTRODUCED COUNTRY-BY-COUNTRY REPORTING ON AGGRESSIVE TAX AVOIDANCE: EVIDENCE FROM EUROPEAN BANKS

Svetlana Sabljiä†, Barbara Mã–rec () and Vladimir Vasiä† ()
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Svetlana Sabljiä†: Department of Accounting and Business Finance, University of Banja Luka Banja Luka, Bosnia and Herzegovina
Barbara Mã–rec: Department of Accounting and Auditing, University of Ljubljana Ljubljana, Slovenia
Vladimir Vasiä†: Faculty of Economics, Department of Statistics and Mathematics, University of Belgrade Belgrade, Serbia

The Singapore Economic Review (SER), 2025, vol. 70, issue 03, 805-827

Abstract: This study investigates the effects of enhanced tax transparency on aggressive tax avoidance using Country-by-Country Reporting (CbCR) as the main instrument of tax transparency for deterring and preventing tax avoidance by multinational companies. We find strong empirical evidence on decreased aggressive tax avoidance by European Union multinational banks in the post-implementation period (2014–2018). We also document that banks with full CbCR implementation are less engaged in aggressive tax avoidance. Our empirical results make a significant contribution to the science, policy makers, Organisation for Economic Co-operation and Development and European Commission in terms of CbCR efficacy and future development of tax avoidance instruments.

Keywords: Tax avoidance; tax transparency; Country-by-Country Reporting; effective tax rate (search for similar items in EconPapers)
JEL-codes: F23 G21 H26 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0217590822500096

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