ABSTRACT
The chapter focuses on international issues surrounding how corporate tax is reported, where the tax base is the profit reported by a company for tax purposes. The effective tax rate may differ from the statutory rate for various reasons. The International Accounting Standard (IAS 12) requires an explanation of the factors contributing to the effective tax rate for a company. Corporate income taxes attract attention because multinational companies (MNCs) may attempt to shift profits from one jurisdiction to another in order to lower the overall tax charge. This may deprive some countries of tax on activities carried out there. National tax authorities have the power to demand information on transfer pricing, but it will remain confidential. Pressure for country-by-country reporting means that in the EU and some other countries (but not in the US) financial institutions (mainly banks) and MNCs in the extractive industries must now publish detail on how much tax they pay in each country. Researchers use published information from annual reports to indicate how companies may be acting in regards to tax planning, but much of this is indirect interpretation as the direct evidence remains confidential.
