Country-by-Country Reporting Data and Locations of European Banks Activities and Profits

Transcription

1 Country-by-Country Reporting Data and Locations of European Banks Activities and Profits Petr Janský Charles University Brno, 9 March 2017 The project has received funding from the European Union s Horizon 2020 research and innovation programme under grant agreement No

2 Fair tax or corporate tax avoidance? Corporate income tax revenue loss for Czechia Evidence: 7 extrapolations, 2 re-estimations Source Billion CZK % GDP IMF () IMF () UNCTAD () OECD () (lower) OECD () (higher) EPRS () (lower) EPRS () (higher) Janský a Cobham (2017) - IMF () Janský a Palanský (2017) - UNCTAD () Source: Author, Janský (2016)

3 Objectives Data Methodology Results Conclusions Structure

4 Research question and objectives How large is misalignment between (reported) profits and (real) economic activities? Profits in havens, activity elsewhere? Objectives (for this and follow-up research): Test the usefulness of published data with the view to test the effects of policy changes Identify which countries seem to be (tax) havens Enrich the research about revenue losses Decompose the causes of misalignment

5 Data Companies profits & activities across countries Sources: EU banks country-by-country reporting (CBCR) Global multinationals (Bureau van Dijk s Orbis) US multinationals (Bureau of Economic Analysis)

6 EU banks CBCR data

7 EU banks CBCR data

8 EU banks CBCR data Richard Murphy & TJN 2003, Directive 2013 Murphy (), Jelínková (2016), SOMO (2017) Work in progress, data collection difficult The data as they are as of 31 January years, consistency and quality (e.g. Other ) Banks collected (40 of top more)

9 EU banks CBCR data - preliminary Bank Country (headquarters) ranking 2016 ranking Notes about the data HSBC Holdings plc UK 1 1 OK BNP Paribas France 2 2 OK Credit Agricole France 5 3 OK Deutschebank Germany 4 4 OK Barclays UK 3 5 OK Santander Spain 8 6 OK Société Général France 7 7 OK BPCE SA France 9 8 OK Royal Bank of Scotland UK 6 9 OK Lloyds Banking Group plc UK OK UBS AG Switzerland OK Unicredit Italy OK ING Bank The Netherlands OK Credit Suisse Switzerland OK OK Spain OK Crédit Mutuel - CIC France OK Intesa Sanpaolo Spa Italy OK Rabobank Group The Netherlands OK Nordea Bank AB Sweden OK Standard Chartered plc UK OK Commerzbank AG Germany OK DZ Bank AG Germany OK Danske Bank Denmark OK Cassa Depositi e Prestiti SpA Italy No data (government, Italy-centered) ABN AMRO The Netherlands OK Caixabank SA Spain No data PAO Sberbank Russia No data Nationwide Building Society UK OK Svenska Handelsbanken AB Sweden OK Skandinavska Enskilda Banken AB Sweden OK DnB NOR Bank ASA Norway OK KBC Bank Belgium OK Swedbank AB Sweden No data LBBW Germany Information only about Turnover and employees Dexia SA Belgium Only employees info La Banque Postale France No data Bayerische Landesbank Germany OK Banco de Sabadell SA Spain No data Bankia SA Spain OK Erste Group Austria OK Raiffeisen Gruppe Switzerland Switzerland No data Nykredit Holding A/S Denmark No data Norddeutsche Landesbank Girozentrale Germany OK Belfius Banque SA Belgium OK PAO VTB Bank Russia No data Helaba Landesbank Hessen-Thüringen Germany OK Banco Popolare Societa Cooperativa + Banco Popolare di Milano Scarl Italy - 47 No data (recently merged) Banca Monte dei Paschi di Siena SpA Italy OK Banco Populare Espanol SA Spain OK Zürcher Kantonalbank Switzerland No data Allied Irish Banks plc Ireland >50 >50 OK NIBC Bank NV Netherlands >50 >50 OK Dekabank Germany >50 >50 OK KfW Germany >50 >50 OK RaIffeisen Bank International Austria >50 >50 OK

10 Estimating misalignment better align rights to tax with economic activity (OECD 2013: 11). Indicators of misalignment between profits and economic activity (e.g. turnover, employees)

11 Estimating misalignment What are the shares of all banks for countries? Relative misalignment it = Share of profit it 100 Share of turnover it Real (0-100), havens (above 100)

12 Preliminary results: European banks The relative misalignment of profit with a number of employees in (% of profits) India Sri Lanka Other Morocco Spain Turkey Bulgaria Hungary Bosna and Hercegovina Serbia Poland Great Britain Romania Russia South Africa Kenya Brazil Malaysia Italy Algeria Colombia Mexico France Uruguay Germany Chile Czech Republic Egypt Switzerland Slovakia Belarus Portugal USA Sweden Argentina The Netherlands Taiwan Peru UAE Belgium Singapore Austria Canada Mauritius Bangladesh China Denmark Monaco Malta Finland South Korea Isle of Man Jersey Australia Norway Channel islands Japan Hong Kong Qatar New Zealand Ireland Luxembourg Cayman Island 0 2,000 4,000 6,000 8,000 10,000 Source: Author s calculations

13 Preliminary results: European banks The relative misalignment of profit with a number of employees in (% of profits) India Spain Turkey Poland Great Britain Russia South Africa Brazil Italy Mexico France Germany Chile Czech Republic USA Sweden Argentina The Netherlands Belgium Singapore China Denmark Finland Australia Norway Hong Kong Ireland Luxembourg Source: Author s calculations

14 Preliminary results: European banks The relative misalignment of profit with turnover, number of employees in and (% of profits) Great Britain Brazil Spain Italy The Netherlands USA France Germany Denmark Turkey South Africa Sweden Mexico Belgium Singapore Poland Russia Argentina Chile Norway Finland Australia Czech Republic India Hong Kong Luxembourg Ireland China mean of RM1tur mean of RM1emp Source: Author s calculations

15 Preliminary results: European banks The relative misalignment of profit with turnover and a number of employees, averages for and (% of profits) China Hong Kong India Czech Republic Finland Australia Norway Russia Argentina Chile Sweden Belgium Poland South Mexico Africa Singapore Turkey France The Netherlands Denmark Germany Brazil Italy USA Spain Great Britain Ireland Luxembourg Relative misalignment with employees Profit reported in the country Source: Author s calculations

16 Preliminary results: European banks The relative misalignment of profit with turnover and a number of employees, averages for and (% of profits) Russia Poland South Africa Turkey Mexico Czech Republic Chile France Germany Argentina Sweden The Netherlands Belgium Singapore Italy Brazil USA 50 Spain Great Britain Relative misalignment with employees Profit reported in the country Source: Author s calculations

17 Estimating misalignment How much profit is misaligned? Profit misaligned it = Turnover it Total turnover t Total profit t Profit it Real (negative), aligned (0), havens (positive)

18 Preliminary results: European banks Misaligned profits, with a number of employees in (million euro) Great Britain India Spain Poland Italy Turkey Brazil France Russia South Africa Mexico Chile Czech Republic Sweden Argentina Germany Singapore Australia Norway Finland Denmark The Netherlands Belgium China USA Ireland Luxembourg Hong Kong -10,000-5, ,000 10,000 Source: Author s calculations

19 Preliminary results: European banks Misaligned profits, with a number of employees and turnover in and (million euro) Great Britain Italy India France Poland Spain Brazil Turkey Russia South Africa The Netherlands Mexico Czech Republic Sweden Argentina Chile Germany Australia Singapore Finland Norway Denmark Belgium China Ireland USA Luxembourg Hong Kong -15,000-10,000-5, ,000 10,000 mean of MA1tur mean of MA1emp Source: Author s calculations

20 Preliminary results: European banks Misaligned profits, with a number of employees and turnover in and (million euro) Hong Kong Luxembourg China Ireland Czech Belgium India Poland France Mexico Chile Argentina Republic Australia Norway Finland Turkey Russia South Sweden Africa Singapore Denmark The Netherlands Germany Brazil Spain Italy USA Great Britain Absolute misalignment with employees Profit reported in the country Source: Author s calculations

21 Results: Global multinationals Source: Cobham and Loretz ()

22 Results: US multinationals Source: Cobham and Janský ()

23 Conclusion There are relatively large misalignments Ireland, Luxembourg, also Hong Kong, Singapore (and, with little data, Cayman Islands, Jersey) Long to-do lists for research and policy Bank-level, tax rates, various explanations (profit-shifting, different productivity,...) More and better data, large companies Futher steps (Cobham, Gray, Murphy, 2017)

24 Country-by-Country Reporting Data and Locations of European Banks Activities and Profits Petr Janský Charles University Brno, 9 March 2017 The project has received funding from the European Union s Horizon 2020 research and innovation programme under grant agreement No

25 References Barrios, S., d'andria, D., Gesualdo, M., Pontikakis, D., & Pycroft, J. (2016). Modelling corporate tax reforms in the EU: New simulations with the CORTAX model (No ). Joint Research Centre (Seville site). COMMISSION STAFF WORKING DOCUMENT, IMPACT ASSESSMENT, Accompanying the document, Proposals for a Council Directive on a Common Corporate Tax Base and a Common Consolidated Corporate Tax Base (CCCTB) Crivelli, Ernesto, Ruud De Mooij, and Michael Keen Base Erosion, Profit Shifting and Developing Countries. FinanzArchiv: Public Finance Analysis. doi: / x International Monetary Fund.. Spillovers in International Corporate Taxation. IMF Policy Paper. UNCTAD.. World Investment Report - Reforming International Investment Governance. New York, USA and Geneva, Switzerland: United Nations Conference on Trade and Development. Available at: OECD.. Measuring and Monitoring BEPS, Action 11 - Final Report. Paris: Organisation for Economic Co-operation and Development. EPRS.. Bringing Transparency, Coordination and Convergence to Corporate Tax Policies in the European Union: Assessment of the Magnitude of Aggressive Corporate Tax Planning. Global distribution of revenue loss from tax avoidance: Re-estimation and country results, 2017, with Alex Cobham. Forthcoming as WIDER Working Paper. Fiscal decentralization and the shadow economy, WIDER Working Paper 2016/172 Helsinki: UNU-WIDER, 2016, with Miroslav Palanský. Estimating the costs of international corporate tax avoidance: the case of the Czech Republic (2016). IES Working Paper 21/2016, Charles University. Janský, P., & Kokeš, O. (). Corporate tax base erosion and profit shifting out of the Czech Republic. Post-Communist Economies, 27(4), Janský, P., & Kokeš, O. (2016). Profit-shifting from Czech multinational companies to European tax havens. Applied Economics Letters, 23(16), Global distribution of revenue loss from tax avoidance: Re-estimation and country results, 2017, with Alex Cobham. Forthcoming as WIDER Working Paper. Fiscal decentralization and the shadow economy, WIDER Working Paper 2016/172 Helsinki: UNU-WIDER, 2016, with Miroslav Palanský. Estimating the costs of international corporate tax avoidance: the case of the Czech Republic (2016). IES Working Paper 21/2016, Charles University.

26 Acknowledgements I am thankful to Eliška Jelínková, Jakub Siegl and other students at Charles University for their research assistance with the preparation of the data, on which this paper is based. This presentation has been supported by the Horizon2020 programme of the European Union through the COFFERS-project (727145).

27 Acknowledgements Some of the research presented is work jointly produced with Alex Cobham, specifically: Cobham, A., & Janský, P. (). Measuring Misalignment: the Location of US Multinationals Economic Activity Versus the Location of their Profits. International Centre for Tax and Development Working Paper, (42).