Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic
Companies use different methods and techniques to transfer taxable profits to tax havens. The paper aims at analysing the influence of the relocation of the registered office of Slovak companies in tax havens in relation to the leverage ratio and the ratio of debt per sales and to verify the use of...
Main Authors: | , |
---|---|
Format: | Article |
Language: | English |
Published: |
Vilnius Gediminas Technical University
2019-10-01
|
Series: | Technological and Economic Development of Economy |
Subjects: | |
Online Access: | https://mma.vgtu.lt/index.php/TEDE/article/view/11338 |
id |
doaj-68af93b00c784196bd78b5f3ddde96c6 |
---|---|
record_format |
Article |
spelling |
doaj-68af93b00c784196bd78b5f3ddde96c62021-07-02T03:32:52ZengVilnius Gediminas Technical UniversityTechnological and Economic Development of Economy2029-49132029-49212019-10-0125610.3846/tede.2019.11338Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak RepublicMichal Ištok0Mária Kanderová1Department of Finance and Accounting, Faculty of Economics, Matej Bel University in Banská Bystrica, Banská Bystrica, SlovakiaDepartment of Quantitative Methods and Information Systems, Faculty of Economics, Matej Bel University in Banská Bystrica, Banská Bystrica, Slovakia Companies use different methods and techniques to transfer taxable profits to tax havens. The paper aims at analysing the influence of the relocation of the registered office of Slovak companies in tax havens in relation to the leverage ratio and the ratio of debt per sales and to verify the use of debt by Slovak firms in the transfer of profits. In evaluating these indicators, we chose two approaches. We first analysed the change of indicators only for those firms that transferred their seat to lower tax jurisdiction. The analysis is complemented by a different view, when the selected indicators are compared to a group of businesses with a link to tax havens and with no link to tax havens. Our empirical results clearly indicate the tendency that firms in Slovakia benefit from the possibility of transferring profits to lower tax jurisdictions via debt channels. The median values of debt ratio after the transfer of the registered office to tax havens increased by 7.8%. The median value of the tracking indicator is 1.2 times higher for firms with tax haven links than for companies without links to tax havens. https://mma.vgtu.lt/index.php/TEDE/article/view/11338debt ratioownership link with tax havensprofit-shiftingtax optimizationSlovak companiesWilcoxon signed rank test |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Michal Ištok Mária Kanderová |
spellingShingle |
Michal Ištok Mária Kanderová Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic Technological and Economic Development of Economy debt ratio ownership link with tax havens profit-shifting tax optimization Slovak companies Wilcoxon signed rank test |
author_facet |
Michal Ištok Mária Kanderová |
author_sort |
Michal Ištok |
title |
Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic |
title_short |
Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic |
title_full |
Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic |
title_fullStr |
Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic |
title_full_unstemmed |
Debt/asset ratio as evidence of profit-shifting behaviour in the Slovak Republic |
title_sort |
debt/asset ratio as evidence of profit-shifting behaviour in the slovak republic |
publisher |
Vilnius Gediminas Technical University |
series |
Technological and Economic Development of Economy |
issn |
2029-4913 2029-4921 |
publishDate |
2019-10-01 |
description |
Companies use different methods and techniques to transfer taxable profits to tax havens. The paper aims at analysing the influence of the relocation of the registered office of Slovak companies in tax havens in relation to the leverage ratio and the ratio of debt per sales and to verify the use of debt by Slovak firms in the transfer of profits. In evaluating these indicators, we chose two approaches. We first analysed the change of indicators only for those firms that transferred their seat to lower tax jurisdiction. The analysis is complemented by a different view, when the selected indicators are compared to a group of businesses with a link to tax havens and with no link to tax havens. Our empirical results clearly indicate the tendency that firms in Slovakia benefit from the possibility of transferring profits to lower tax jurisdictions via debt channels. The median values of debt ratio after the transfer of the registered office to tax havens increased by 7.8%. The median value of the tracking indicator is 1.2 times higher for firms with tax haven links than for companies without links to tax havens.
|
topic |
debt ratio ownership link with tax havens profit-shifting tax optimization Slovak companies Wilcoxon signed rank test |
url |
https://mma.vgtu.lt/index.php/TEDE/article/view/11338 |
work_keys_str_mv |
AT michalistok debtassetratioasevidenceofprofitshiftingbehaviourintheslovakrepublic AT mariakanderova debtassetratioasevidenceofprofitshiftingbehaviourintheslovakrepublic |
_version_ |
1721341370491207680 |