Figure 1:
The evolution of statutory corporate income tax rates during 1980–2020.
Notes: EU and OECD means are unweighted averages. Data source: Tax Foundation.
Table 1:
Summary statistics for the baseline YRTTI analysis sample.
| Panel A: Entire sample | N | Mean | St. dev. | p1 | p25 | p50 | p75 | p99 |
|---|---|---|---|---|---|---|---|---|
| Firm characteristics | ||||||||
| CASH ETR | 194,138 | 0.23 | 0.14 | 0 | 0.16 | 0.25 | 0.29 | 0.74 |
| Pre-tax income | 194,138 | 2,067,682 | 41,726,102 | 2,662 | 64,586 | 168,194 | 433,479 | 23,040,336 |
| MNE | 194,138 | 0.11 | 0.31 | 0 | 0 | 0 | 0 | 1 |
| Log total assets | 194,138 | 14.3 | 1.50 | 11.4 | 13.3 | 14.0 | 15.0 | 19.2 |
| Fixed assets | 194,138 | 0.31 | 0.26 | 0 | 0.082 | 0.25 | 0.50 | 0.93 |
| Return on assets (ROA) | 194,138 | 0.17 | 0.15 | 0.0027 | 0.061 | 0.13 | 0.23 | 0.71 |
| Debt-to-Equity | 194,138 | 96.4 | 307.6 | −256.8 | 0 | 10.2 | 69.8 | 1987.9 |
| Paid dividends1 | 194,138 | 0.045 | 0.069 | 0 | 0 | 0.025 | 0.062 | 0.38 |
| Book-tax differences | ||||||||
| Special items2 | 194,138 | −0.0011 | 0.011 | −0.070 | 0 | 0 | 0 | 0.020 |
| R&D expenses2 | 194,138 | 0.0010 | 0.0041 | 0 | 0 | 0.000025 | 0.00043 | 0.017 |
| Intra-group interest payments1 | 194,138 | 0.00073 | 0.0033 | 0 | 0 | 0 | 0 | 0.020 |
| Statutory provisions2 | 194,138 | 0.00050 | 0.0028 | 0 | 0 | 0 | 0 | 0.020 |
| Δ Book-tax amortization difference2 | 194,138 | 0.00030 | 0.0038 | −0.0086 | 0 | 0 | 0 | 0.021 |
| Δ Book-tax depreciation difference2 | 194,138 | 0.000090 | 0.00079 | 0 | 0 | 0 | 0 | 0.0041 |
| Received dividends1 | 194,138 | 0.028 | 0.058 | 0 | 0 | 0 | 0.038 | 0.34 |
| Contributions and subsidies1 | 194,138 | 0.00081 | 0.0030 | 0 | 0 | 0 | 0 | 0.017 |
| NOL1 | 194,138 | 0.027 | 0.14 | 0 | 0 | 0 | 0 | 0.78 |
| ΔNOL1 | 194,138 | −0.012 | 0.040 | −0.23 | 0 | 0 | 0 | 0 |
Notes: This table presents the summary statistics for all observations in 2000–2015. Panel A presents the statistics for the entire sample. See Table A1 in Appendix for Panel B (restricted to corporate groups). CASH ETR is cash taxes paid divided by earnings before taxes. MNE is an indicator variable equal to 1 if the firm is a multinational enterprise and 0 otherwise. NOL = Total net operating losses. ΔNOL = net operating losses utilized to reduce taxable income.
Figure 2:
Evolution of CASH ETR quantiles 0.1, 0.25, 0.5, 0.75, and 0.9 separately for MNEs and domestics.
Notes: The figure plots ETR quantiles 0.1, 0.25, 0.5, 0.75, and 0.9 against the sample years 2000–2015 using the main data source, YRTTI tax return data. The dashed line represents the Finnish statutory corporate income tax rate. Finnish MNEs include Finnish-headquartered multinationals. Foreign MNEs include subsidiaries of foreign-headquartered multinationals that are located in Finland. Domestic groups include purely domestic corporate groups and domestic firms include domestic standalone firms.
Figure 3:
Yearly share of firms with CASH ETR above and below the statutory tax rate for MNEs and domestics.
Notes: YRTTI data, full sample. Left panel figure (MNE) includes Finnish-headquartered multinationals and Finnish subsidiaries of foreign-headquartered multinationals. Right panel figure (Domestic) includes domestic corporate groups and domestic standalone firms. ETR=STR includes firms with an ETR within ±0.01% of the STR.
Figure 4:
Distributions of the difference between CASH ETR and statutory tax rate (STR) in 2000 and 2015.
Notes: YRTTI data, full sample for years 2000 and 2015. The distribution is winsorized from right at 0.2 to increase readability, that is, all values above 0.2 are set to 0.2. The distribution of values above 0.2 is flat with a very low density.
Table 2:
OLS regressions of CASH ETR on trend for different sub-samples.
| (1) All firms | (2) Finnish MNEs | (3) Foreign MNEs | (4) Domestic groups | (5) Domestic firms | |
|---|---|---|---|---|---|
| Trend | −0.00111*** (−4.65) | −0.00780*** (−5.63) | −0.00162* (−1.66) | −0.00187 (−1.51) | −0.000578** (−2.31) |
| STR | 0.645*** (27.63) | 0.267** (1.99) | 0.581*** (6.78) | 0.715*** (6.23) | 0.673*** (26.87) |
| Controls for firm characteristics | |||||
| Pre-tax income growth | −97.42*** (−7.60) | 358.1* (1.82) | −164.1*** (−2.77) | 365.2** (2.31) | −94.70*** (−7.14) |
| Log total assets | −0.00390*** (−4.19) | 0.00328 (0.56) | −0.00251 (−0.70) | 0.00321 (0.56) | −0.00443*** (−4.50) |
| Fixed assets | −0.0412*** (−12.34) | −0.0371* (−1.90) | −0.0365** (−2.51) | −0.0882*** (−5.22) | −0.0378*** (−10.60) |
| ROA | −0.0523*** (−14.93) | −0.0560** (−2.23) | −0.0565*** (−4.03) | −0.136*** (−7.09) | −0.0471*** (−12.67) |
| Debt-to-Equity | −0.0000468*** (−29.14) | −0.0000216*** (−3.09) | −0.00000910** (−2.06) | −0.0000294*** (−4.02) | −0.0000515*** (−28.84) |
| Paid dividends | 0.191*** (24.28) | 0.264*** (3.05) | 0.144*** (6.00) | 0.210*** (4.16) | 0.192*** (23.01) |
| Controls for book-tax differences | |||||
| Special items | 1.734*** (33.84) | 0.560*** (4.60) | 1.337*** (9.75) | 0.951*** (5.35) | 2.143*** (35.39) |
| R&D expenses | −0.173 (−1.57) | −0.130 (−0.48) | −0.130 (−0.50) | −0.191 (−0.44) | −0.117 (−0.85) |
| Intra-group interest payments | −1.938*** (−11.18) | −1.750*** (−2.92) | −2.357*** (−7.76) | −3.490*** (−4.32) | −1.467*** (−6.53) |
| Statutory provisions | 0.602*** (2.64) | −1.009 (−1.27) | 0.974** (2.03) | 2.496** (2.20) | 0.713*** (2.66) |
| Δ Book-tax amortization diff. | −2.033*** (−17.80) | −1.704*** (−5.47) | −1.574*** (−4.87) | −1.759*** (−5.28) | −2.164*** (−15.68) |
| Δ Book-tax depreciation diff. | −2.915*** (−6.79) | −2.823*** (−2.79) | −3.914*** (−3.23) | −2.369* (−1.70) | −2.402*** (−4.43) |
| Received dividends | −0.0482*** (−6.03) | −0.157* (−1.67) | −0.0527** (−2.18) | −0.0702 (−1.39) | −0.0396*** (−4.64) |
| Contributions and subsidies | 3.048*** (19.33) | 1.077 (1.32) | 2.469** (2.25) | 2.060*** (2.82) | 3.222*** (19.49) |
| NOL | −0.126*** (−23.82) | −0.0917*** (−2.75) | −0.0824*** (−6.10) | −0.124*** (−2.84) | −0.136*** (−23.02) |
| ΔNOL | 0.503*** (44.70) | 0.511*** (6.16) | 0.371*** (7.97) | 0.615*** (6.92) | 0.512***(43.17) |
| Constant | 0.208*** (4.64) | 0.204* (1.78) | 0.00344 (0.03) | 0.0875 (0.70) | 0.197*** (4.60) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 190975 | 6723 | 13325 | 10880 | 159192 |
| R-squared | 0.506 | 0.540 | 0.560 | 0.515 | 0.507 |
| Adj. R-squared | 0.431 | 0.452 | 0.484 | 0.403 | 0.432 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Column 1 includes all firms, column 2 includes only Finnish-owned multinationals, column 3 includes only subsidiaries of foreign owned MNEs located in Finland, column 4 includes only domestic corporate groups, and column 5 includes only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the entire sample from YRTTI tax return data. t statistics are in parentheses.
Table 3:
OLS regressions of CASH ETR on trend with sample restrictions on loss histories.
| All firms | Corporate groups only | |||||||
|---|---|---|---|---|---|---|---|---|
| (1) Balanced | (2) Bal., never losses | (3) Never losses | (4) Never NOL | (5) Balanced | (6) Bal., never losses | (7) Never losses | (8) Never NOL | |
| Trend | −0.000901** (−2.47) | 0.000601 (1.19) | 0.000837*** (2.87) | 0.000852*** (2.79) | −0.00370***(−3.96) | −0.00578*** (−3.47) | −0.00290*** (−3.67) | −0.00307*** (−3.75) |
| STR | 0.692*** (18.60) | 0.849*** (18.79) | 0.841*** (31.11) | 0.859*** (30.82) | 0.488*** (5.48) | 0.371** (2.24) | 0.633*** (8.83) | 0.629*** (8.69) |
| Controls for firm characteristics | ||||||||
| Pre-tax income growth | −134.6*** (−5.60) | 49.11 (0.71) | 28.38 (1.06) | 30.84 (1.08) | −121.5 (−1.45) | 11899.4 (1.62) | 274.4** (2.39) | 270.6** (2.35) |
| Log total assets | −0.00189 (−1.06) | −0.00650** (−2.29) | −0.00927*** (−7.27) | −0.00841*** (−6.32) | 0.00384 (0.92) | 0.00484 (0.38) | −0.00346 (−1.01) | −0.00310 (−0.88) |
| Fixed assets | −0.0321*** (−5.49) | −0.0234*** (−3.15) | −0.0347*** (−8.21) | −0.0307*** (−7.13) | −0.0736*** (−4.84) | −0.0827*** (−3.51) | −0.0583*** (−4.89) | −0.0590*** (−4.82) |
| ROA | −0.0685*** (−10.80) | −0.0852*** (−8.94) | −0.0943*** (−20.76) | −0.0909*** (−19.31) | −0.105*** (−5.92) | −0.0578* (−1.75) | −0.105*** (−8.33) | −0.101*** (−7.94) |
| Debt-to-Equity | −0.0000579*** (−17.06) | −0.0000649*** (−5.50) | −0.0000527*** (−18.43) | −0.0000507*** (−16.74) | −0.0000269*** (−3.20) | −0.0000119 (−1.00) | −0.0000228*** (−4.59) | −0.0000228*** (−4.37) |
| Paid dividends | 0.204*** (16.61) | 0.117*** (7.28) | 0.140*** (15.37) | 0.133*** (14.23) | 0.163*** (5.83) | 0.354*** (4.03) | 0.141*** (5.87) | 0.141*** (5.77) |
| Controls for book-tax differences | ||||||||
| Special items | 1.836*** (21.23) | 1.230*** (7.91) | 1.798*** (25.62) | 1.750*** (23.66) | 0.883*** (6.54) | 0.538*** (3.55) | 1.015*** (10.03) | 0.947*** (9.51) |
| R&D expenses | −0.0613 (−0.32) | −0.473** (−2.51) | −0.404*** (−3.20) | −0.363*** (−2.79) | 0.141 (0.49) | −0.248 (−0.54) | −0.279 (−1.27) | −0.259 (−1.16) |
| Intra-group interest payments | −1.990*** (−6.75) | −1.902*** (−3.50) | −1.912*** (−8.03) | −2.035***(−8.22) | −2.555*** (−6.20) | −2.408*** (−3.66) | −2.679*** (−8.01) | −2.828*** (−8.76) |
| Statutory provisions | 0.682* (1.86) | 0.0912 (0.16) | 0.521* (1.71) | 0.675** (2.08) | 0.706 (1.09) | −0.480 (−0.65) | 0.505 (1.06) | 0.750 (1.55) |
| Δ Book-tax amortization diff. | −2.224*** (−13.44) | −2.151*** (−7.47) | −2.157*** (−15.05) | −2.155*** (−14.57) | −1.904*** (−6.76) | −1.393*** (−4.10) | −1.719*** (−7.56) | −1.713*** (−7.82) |
| Δ Book-tax depreciation diff. | −2.716*** (−3.99) | −2.165*** (−2.61) | −2.520*** (−4.62) | −2.610*** (−4.63) | −4.358*** (−3.90) | −0.710 (−0.60) | −2.441*** (−2.89) | −2.259*** (−2.59) |
| Received dividends | −0.0425*** (−3.39) | −0.0408*** (−2.98) | −0.0525*** (−6.04) | −0.0524*** (−5.86) | −0.0566* (−1.92) | −0.315*** (−3.41) | −0.0637*** (−2.72) | −0.0683*** (−2.87) |
| Contributions and subsidies | 2.977*** (11.57) | 2.122*** (5.32) | 2.745*** (13.95) | 2.645*** (12.95) | 2.600*** (3.59) | 2.181 (0.79) | 2.253*** (3.51) | 2.427*** (3.71) |
| NOL | −0.117*** (−11.74) | −0.131 (−1.10) | −0.0380 (−1.00) | −0.0923*** (−3.97) | −4.844 (−1.27) | 0.0816 (1.07) | ||
| ΔNOL | 0.601*** (27.90) | 0.585*** (3.13) | −0.0816*** (−4.00) | 0.564*** (9.65) | −1.549* (−1.73) | −0.295** (−2.41) | ||
| Constant | 0.129*** (4.72) | 0.153*** (3.80) | 0.255*** (6.34) | 0.172*** (8.09) | 0.0290 (0.30) | 0.0925 (0.41) | 0.206** (2.09) | 0.202** (2.03) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 74031 | 21600 | 95338 | 86240 | 12844 | 2526 | 17724 | 17024 |
| R-squared | 0.495 | 0.439 | 0.530 | 0.532 | 0.535 | 0.556 | 0.544 | 0.547 |
| Adj. R-squared | 0.433 | 0.399 | 0.455 | 0.457 | 0.452 | 0.511 | 0.465 | 0.469 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. The estimation sample is the entire sample from YRTTI tax return data, but columns 5 to 8 are restricted to corporate groups. Additionally, column 1 (5) restricts the sample to firms (corporate groups) that are observed in each sample year (whether the observation is kept in the final sample or not). Column 2 (6) additionally requires that the firm (corporate group) never reports negative accounting profits. Column 3 (7) requires never utilizing loss carryforwards, and column 4 (8) requires never having outstanding loss carryforwards. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. tstatistics are in parentheses.
Figure 5:
Trend coefficients over the CASH ETR distribution for different sub-samples.
Notes: The figures plot the coefficient point estimates of Trend for every quantile of the CASH ETR distribution for the four different firm types. The shaded blue area describes the 95% confidence interval of the point estimates. The used data is the YRTTI tax return data for 2000–2015. Finnish MNEs include Finnish-headquartered multinationals. Foreign MNEs include subsidiaries of foreign-headquartered multinationals that are located in Finland. Domestic groups include purely domestic corporate groups and domestic firms include domestic standalone firms.
Table 4:
Robustness of the main results to inclusion of interaction terms.
| Finnish MNEs | Foreign MNEs | Domestic groups | Domestic firms | |||||
|---|---|---|---|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
| Trend | −0.0100*** (−6.25) | −0.00768*** (−5.38) | −0.00130 (−0.86) | −0.00237** (−2.32) | −0.00287* (−1.83) | −0.00208 (−1.62) | −0.0000492 (−0.17) | −0.000879*** (−3.42) |
| Post GFC | −0.0744 (−1.63) | −0.0715** (−2.27) | −0.0867** (−2.25) | 0.0499*** (5.78) | ||||
| I(2009-2010) | −0.276** (−2.22) | 0.0904 (1.20) | −0.0314 (−0.29) | −0.0164 (−0.71) | ||||
| I(2013-2015) | −0.0980 (−0.99) | 0.0995 (1.56) | −0.0677 (−0.81) | 0.0972*** (4.94) | ||||
| Trendx Post GFC | 0.00512** (2.00) | 0.00375** (2.02) | 0.00517** (2.39) | −0.00308*** (−6.40) | ||||
| Trendx I(2009-2010) | 0.0158** (2.09) | −0.00603 (−1.32) | 0.00174 (0.27) | 0.000963 (0.69) | ||||
| Trendx I(2013-2015) | 0.00522 (1.07) | −0.00468 (−1.47) | 0.00398 (0.97) | −0.00514*** (−5.30) | ||||
| STR | 0.394** (2.40) | 0.515*** (2.90) | 0.777*** (7.47) | 0.552*** (4.73) | 0.892*** (6.43) | 0.928*** (6.45) | 0.550*** (17.25) | 0.480*** (13.68) |
| Constant | 0.183 (1.55) | 0.141 (1.17) | −0.0502 (−0.43) | 0.0384 (0.32) | 0.0396 (0.31) | 0.0243 (0.19) | 0.232*** (5.42) | 0.258*** (5.95) |
| Firm characteristic controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Book-tax difference controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 6723 | 6723 | 13325 | 13325 | 10880 | 10880 | 159192 | 159192 |
| R-squared | 0.542 | 0.542 | 0.561 | 0.561 | 0.516 | 0.516 | 0.507 | 0.507 |
| Adj. R-squared | 0.453 | 0.454 | 0.484 | 0.485 | 0.404 | 0.404 | 0.433 | 0.433 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Columns 1 and 2 include only Finnish-owned multinationals, columns 3 and 4 include only subsidiaries of foreign owned MNEs located in Finland, columns 5 and 6 include only domestic corporate groups and columns 7 and 8 include only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample I(2013–2015) year. Trend receives values 0–15. Post GFC is an indicator which gets the value 1 after the year 2007. I(2009–2010) and I(2013–2015) are indicators which get the value 1 during years 2009–2010 and 2013–2015. Other variables are as defined in Section 4.2. Coefficients for the control variables are omitted here, see Appendix Table A9 for entire regression output. t statistics are in parentheses.
Figure 6:
Share of firms reporting zero profit by year.
Notes: The figure illustrates the evolution of firms reporting zero taxable profit and zero accounting profit. The used data source is the YRTTI tax return data for 2007–2015. Firm is considered as reporting zero profit if the taxable (accounting) profit to total assets share of the firm falls between −0.5 and 0.5 percent. Haven affiliated MNEs include Finnish-headquartered multinationals with at least one affiliate located in a tax haven country defined by Menkhoff & Miethe (2019). Non-haven affiliated MNEs include Finnish-headquartered multinationals with no affiliates in tax haven countries. Foreign MNEs include subsidiaries of foreign-headquartered multinationals that are located in Finland. Domestic groups include purely domestic corporate groups and domestic firms include domestic standalone firms. Accounting profit includes all firms due to the share being very similar across the different groups of firms.
Figure 7:
Histograms of ROA and the ratio of taxable profits to total assets.
Notes: The histograms illustrate the distribution of observations around zero return on assets (ROA) and the ratio of taxable profits to total assets. The top panel figures use all observations whereas the bottom panel figures discard observations with any deducted losses. Left panel figures show the histograms of ROA and right panel figures of taxable profits to total assets. The data source is the YRTTI tax return data for 2007–2015. Haven affiliated MNEs include Finnish-headquartered multinationals with at least one affiliate located in a tax haven country defined by Menkhoff & Miethe (2019). Non-haven affiliated MNEs include Finnish-headquartered multinationals with no affiliates in tax haven countries. Foreign MNEs include subsidiaries of foreign-headquartered multinationals that are located in Finland. Domestic groups include purely domestic corporate groups and domestic firms include domestic standalone firms.
Figure A1:
The yearly share of loss-making firms (i.e.,negative accounting profits).
Notes: The data source is the YRTTI tax return data for 2000–2015. MNE includes Finnish-headquartered multinationals as well as subsidiaries of foreign-headquartered multinationals that are located in Finland. Domestic includes domestic corporate groups and domestic standalone firms.
Table A1:
Summary statistics for the corporate groups in the YRTTI sample.
| Panel B: Corporate groups only | N | Mean | St. dev. | p1 | p25 | p50 | p75 | p99 |
|---|---|---|---|---|---|---|---|---|
| Firm characteristics | ||||||||
| CASH ETR | 32,036 | 0.21 | 0.16 | 0 | 0.10 | 0.22 | 0.28 | 0.79 |
| Pre-tax income | 32,036 | 10,498,615 | 101,811,096 | 10,760 | 243,609 | 793,707 | 2,976,211 | 162,794,000 |
| MNE | 32,036 | 0.64 | 0.48 | 0 | 0 | 1 | 1 | 1 |
| Log total assets | 32,036 | 16.1 | 1.76 | 12.6 | 14.7 | 15.9 | 17.3 | 19.6 |
| Fixed assets | 32,036 | 0.33 | 0.26 | 0 | 0.088 | 0.31 | 0.53 | 0.93 |
| ROA | 32,036 | 0.15 | 0.14 | 0.00092 | 0.054 | 0.11 | 0.20 | 0.74 |
| Debt-to-Equity | 32,036 | 86.5 | 300.8 | −290.6 | 0 | 8.82 | 61.6 | 1932.4 |
| Paid dividends1 | 32,036 | 0.040 | 0.074 | 0 | 0 | 0.0051 | 0.049 | 0.38 |
| Book-tax differences | ||||||||
| Special items2 | 32,036 | −0.0023 | 0.014 | −0.074 | 0 | 0 | 0 | 0.027 |
| R&D expenses2 | 32,036 | 0.0020 | 0.0061 | 0 | 0.00000025 | 0.00010 | 0.0011 | 0.029 |
| Intra-group interest payments1 | 32,036 | 0.0026 | 0.0055 | 0 | 0 | 0 | 0.0022 | 0.024 |
| Statutory provisions2 | 32,036 | 0.0015 | 0.0045 | 0 | 0 | 0 | 0 | 0.024 |
| Δ Book-tax amortization difference2 | 32,036 | 0.00060 | 0.0055 | −0.013 | 0 | 0 | 0 | 0.031 |
| Δ Book-tax depreciation difference2 | 32,036 | 0.00027 | 0.0014 | 0 | 0 | 0 | 0 | 0.0090 |
| Received dividends1 | 32,036 | 0.030 | 0.067 | 0 | 0 | 0 | 0.031 | 0.38 |
| Contributions and subsidies1 | 32,036 | 0.00077 | 0.0027 | 0 | 0 | 0 | 0.000084 | 0.017 |
| NOL1 | 32,036 | 0.029 | 0.15 | 0 | 0 | 0 | 0 | 0.87 |
| ΔNOL1 | 32,036 | −0.0091 | 0.034 | −0.20 | 0 | 0 | 0 | 0 |
Notes: This table presents the summary statistics for corporate groups in 2000–2015. Panel A with the entire sample is presented in Table 1. CASH ETR is cash taxes paid divided by earnings before taxes. MNE is an indicator variable equal to 1 if the firm is a multinational enterprise and 0 otherwise. NOL = Total net operating losses. △NOL = net operating losses utilized to reduce taxable income.
Table A2:
UQR results for the YRTTI sample of Finnish multinational enterprises.
| OLS | Unconditional Quantile Regression | |||||
|---|---|---|---|---|---|---|
| (1) OLS | (2) Q10 | (3) Q25 | (4) Q50 | (5) Q75 | (6) Q90 | |
| Trend | −0.00780*** (−5.63) | −0.00309*** (−3.33) | −0.0148*** (−6.10) | −0.00598*** (−3.52) | −0.00428*** (−3.06) | −0.00676* (−1.94) |
| STR | 0.267** (1.99) | −0.147 (−1.43) | −0.468* (−1.92) | 0.710*** (3.91) | 0.713*** (5.07) | 0.571* (1.65) |
| Pre-tax income growth | 358.1* (1.82) | −307.3 (−1.49) | −239.3 (−0.68) | 67.46 (0.38) | 240.9 (1.25) | 1399.4** (2.46) |
| Controls for firm characteristics | ||||||
| Log total assets | 0.00328 (0.56) | 0.0182*** (4.34) | 0.0212** (2.16) | −0.00695 (−1.06) | −0.0116* (−1.96) | 0.000128 (0.01) |
| Fixed assets | −0.0371* (−1.90) | −0.0306* (−1.79) | −0.0906** (−2.23) | −0.0513** (−2.13) | −0.0156 (−0.79) | 0.0501 (1.11) |
| ROA | −0.0560** (−2.23) | 0.0961*** (4.81) | 0.265*** (5.64) | 0.0771** (2.36) | −0.124*** (−5.21) | −0.466*** (−7.48) |
| Debt-to-Equity | −0.0000216*** (−3.09) | −0.00000479 (−0.60) | −0.0000366** (−2.54) | −0.0000300*** (−3.62) | −0.00000287 (−0.46) | 0.00000114 (0.06) |
| Paid dividends | 0.264*** (3.05) | 0.0758 (1.51) | 0.00208 (0.02) | 0.273** (2.50) | 0.414*** (4.18) | 0.464** (2.18) |
| Controls for book-tax differences | ||||||
| Special items | 0.560*** (4.60) | −0.0740 (−0.88) | 0.366 (1.34) | 0.580*** (3.51) | 0.389*** (3.32) | 1.001*** (3.17) |
| R&D expenses | −0.130 (−0.48) | −0.159 (−0.52) | −0.448 (−0.58) | −0.152 (−0.35) | 0.385 (1.29) | −0.467 (−0.78) |
| Intra-group interest payments | −1.750*** (−2.92) | −0.0808 (−0.16) | −2.415* (−1.90) | −2.864*** (−3.87) | −1.634*** (−2.92) | −1.588 (−1.22) |
| Statutory provisions | −1.009 (−1.27) | −0.853 (−1.50) | −3.204** (−2.53) | −0.822 (−1.07) | −0.288 (−0.39) | −1.227 (−0.59) |
| Δ Book-tax amortization diff. | −1.704*** (−5.47) | 0.0872 (0.31) | −1.660** (−2.39) | −2.123*** (−4.67) | −1.459*** (−4.17) | −2.609*** (−3.33) |
| Δ Book-tax depreciation diff. | −2.823*** (−2.79) | −2.568*** (−3.36) | −5.932*** (−3.18) | −3.153** (−2.54) | −1.237 (−1.21) | −2.103 (−0.85) |
| Received dividends | −0.157* (−1.67) | −0.0434 (−0.85) | 0.157 (1.14) | −0.0746 (−0.65) | −0.357*** (−3.29) | −0.412* (−1.71) |
| Contributions and subsidies | 1.077 (1.32) | −0.181 (−0.39) | 0.221 (0.19) | 2.264*** (2.71) | 1.792** (2.50) | 2.784 (1.27) |
| NOL | −0.0917*** (−2.75) | −0.108*** (−3.41) | −0.160** (−2.50) | −0.0683** (−2.02) | −0.0407* (−1.70) | −0.130** (−2.04) |
| △NOL | 0.511*** (6.16) | 0.241** (2.41) | 0.929*** (5.30) | 0.557*** (6.03) | 0.306*** (4.85) | 0.382** (2.14) |
| Constant | 0.204* (1.78) | −0.200** (−2.35) | −0.00952 (−0.05) | 0.255* (1.92) | 0.382*** (3.20) | 0.331 (1.03) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 6723 | 7004 | 7004 | 7004 | 7004 | 7004 |
| R-squared | 0.540 | 0.547 | 0.566 | 0.541 | 0.476 | 0.421 |
| Adj. R-squared | 0.452 | 0.438 | 0.461 | 0.430 | 0.349 | 0.281 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification in column 1 and unconditional quantile regressions in columns 2–6. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the Finnish-owned multinationals in the YRTTI tax return data. t statistics are in parentheses.
Table A3:
UQR results for the YRTTI sample of foreign multinational enterprises.
| OLS | Unconditional Quantile Regression | |||||
|---|---|---|---|---|---|---|
| (1) OLS | (2) Q10 | (3) Q25 | (4) Q50 | (5) Q75 | (6) Q90 | |
| Trend | −0.00162* (−1.66) | 0 (.) | −0.00712** (−2.36) | 0.00208** (2.40) | −0.00152** (−2.27) | −0.000497 (−0.24) |
| STR | 0.581*** (6.78) | 0 (.) | −0.578** (−2.11) | 1.745*** (18.94) | 0.645*** (10.12) | 0.845*** (4.28) |
| Controls for firm characteristics | ||||||
| Pre-tax income growth | −164.1*** (−2.77) | 0 (.) | −1054.5*** (−6.16) | −161.1*** (−3.78) | −4.383 (−0.16) | 193.9* (1.74) |
| Log total assets | −0.00251 (−0.70) | 0 (.) | 0.0410*** (3.67) | −0.00127 (−0.43) | −0.00649*** (−3.02) | −0.0217*** (−2.96) |
| Fixed assets | −0.0365** (−2.51) | 0 (.) | −0.145*** (−3.04) | −0.0532*** (−4.44) | −0.0124 (−1.44) | 0.0214 (0.79) |
| ROA | −0.0565*** (−4.03) | 0 (.) | 0.370*** (8.42) | 0.0404*** (3.41) | −0.102*** (−10.64) | −0.395*** (−12.09) |
| Debt-to-Equity | −0.00000910** (−2.06) | 0 (.) | −0.0000220 (−1.06) | −0.00000633* (−1.74) | −0.00000165 (−0.64) | −0.0000147* (−1.94) |
| Paid dividends | 0.144*** (6.00) | 0 (.) | 0.254*** (4.19) | 0.0713*** (3.33) | 0.177*** (7.31) | 0.168** (2.26) |
| Controls for book-tax differences | ||||||
| Special items | 1.337*** (9.75) | 0 (.) | 3.897*** (7.58) | 1.137*** (8.52) | 0.497*** (5.72) | 1.108*** (4.40) |
| R&D expenses | −0.130 (−0.50) | 0 (.) | −0.562 (−0.66) | 0.187 (0.91) | 0.164 (1.08) | 0.536 (0.90) |
| Intra-group interest payments | −2.357*** (−7.76) | 0 (.) | −5.948*** (−5.47) | −2.671*** (−10.22) | −1.331*** (−7.21) | −1.010* (−1.78) |
| Statutory provisions | 0.974** (2.03) | 0 (.) | −0.523 (−0.35) | 0.483 (1.30) | 0.711** (2.35) | 3.022*** (2.69) |
| Δ Book-tax amortization diff. | −1.574*** (−4.87) | 0 (.) | −1.057 (−1.05) | −2.107*** (−7.02) | −1.503*** (−6.32) | −1.967*** (−2.84) |
| Δ Book-tax depreciation diff. | −3.914*** (−3.23) | 0 (.) | −7.420 (−1.55) | −2.217** (−2.09) | −0.926 (−1.16) | −3.740* (−1.67) |
| Received dividends | −0.0527** (−2.18) | 0 (.) | −0.0624 (−1.05) | −0.00125 (−0.06) | −0.184*** (−7.53) | −0.106 (−1.36) |
| Contributions and subsidies | 2.469** (2.25) | 0 (.) | 1.584 (0.55) | 1.692* (1.83) | 1.959** (2.20) | 5.615** (2.16) |
| NOL | −0.0824*** (−6.10) | 0 (.) | −0.328*** (−7.16) | −0.0235** (−2.42) | −0.0213*** (−3.04) | −0.0746*** (−3.31) |
| △NOL | 0.371*** (7.97) | 0 (.) | 1.621*** (10.09) | 0.336*** (9.27) | 0.0192 (0.78) | −0.166* (−1.88) |
| Constant | 0.00344 (0.03) | 0.0268 (.) | −0.331 (−0.71) | −0.279*** (−2.95) | 0.148** (2.13) | 0.280 (1.45) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 13325 | 13557 | 13557 | 13557 | 13557 | 13557 |
| R-squared | 0.560 | . | 0.628 | 0.568 | 0.466 | 0.382 |
| Adj. R-squared | 0.484 | . | 0.556 | 0.485 | 0.362 | 0.262 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification in column 1 and unconditional quantile regressions in columns 2–6. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the subsidiaries offoreign owned multinationals located in Finland. t statistics are in parentheses.
Table A4:
UQR results for the YRTTI sample of domestic corporate groups.
| OLS | Unconditional Quantile Regression | |||||
|---|---|---|---|---|---|---|
| (1) OLS | (2) Q10 | (3) Q25 | (4) Q50 | (5) Q75 | (6) Q90 | |
| Trend | −0.00187 (−1.51) | −0.00661*** (−4.10) | −0.00317 (−1.61) | −0.00112 (−1.01) | −0.00231* (−1.85) | −0.00141 (−0.32) |
| STR | 0.715*** (6.23) | −0.221 (−1.50) | 0.689*** (3.49) | 1.138*** (10.06) | 0.629*** (5.74) | 1.059*** (2.64) |
| Controls for firm characteristics | ||||||
| Pre-tax income growth | 365.2** (2.31) | −521.2** (−2.52) | −182.4 | (−1.07) 89.78 (0.90) | 273.3** (2.20) | 1778.4*** (3.54) |
| Log total assets | 0.00321 (0.56) | 0.0270*** (3.19) | 0.0184* (1.89) | −0.00858 (−1.58) | −0.00939* (−1.82) | −0.0145 (−0.79) |
| Fixed assets | −0.0882*** (−5.22) | −0.0787*** (−3.45) | −0.123*** (−4.46) | −0.0675*** (−4.40) | −0.0340** (−2.09) | −0.120** (−2.14) |
| ROA | −0.136*** (−7.09) | 0.0743*** (2.80) | 0.0912*** (3.07) | −0.0311* (−1.71) | −0.157*** (−8.05) | −0.641*** (−8.92) |
| Debt-to-Equity | −0.0000294*** (−4.02) | −0.0000386*** (−2.75) | −0.0000456*** (−4.01) | −0.0000160** (−2.50) | −0.0000129** (−2.05) | −0.0000347 (−1.62) |
| Paid dividends | 0.210*** (4.16) | 0.110** (2.28) | 0.159** (2.44) | 0.137*** (3.07) | 0.214*** (3.53) | 0.391* (1.87) |
| Controls for book-tax differences | ||||||
| Special items | 0.951*** (5.35) | 0.489** (2.11) | 0.818*** (2.84) | 0.681*** (4.11) | 0.685*** (4.76) | 2.233*** (3.87) |
| R&D expenses | −0.191 (−0.44) | −1.575** (−2.04) | −0.231 (−0.28) | 0.483 (1.26) | 0.285 (0.69) | −0.680 (−0.53) |
| Intra-group interest payments | −3.490*** (−4.32) | −3.215*** (−2.83) | −6.072*** (−4.49) | −2.877*** (−3.86) | −1.502** (−2.26) | −3.002 (−1.27) |
| Statutory provisions | 2.496** (2.20) | 1.443 (1.06) | 2.751 (1.63) | 1.702** (2.06) | 1.068 (1.10) | 6.893** (2.02) |
| Δ Book-tax amortization diff. | −1.759*** (−5.28) | −0.367 (−0.69) | −3.175*** (−5.89) | −1.755*** (−6.25) | −1.202*** (−4.66) | −2.236** (−2.27) |
| Δ Book-tax depreciation diff. | −2.369* (−1.70) | −4.636** (−2.39) | −3.393 (−1.64) | −0.501 (−0.41) | −2.279* (−1.76) | −3.863 (−0.90) |
| Received dividends | −0.0702 (−1.39) | 0.116** (2.38) | 0.131* (1.73) | −0.0614 (−1.21) | −0.185*** (−2.92) | −0.218 (−1.11) |
| Contributions and subsidies | 2.060*** (2.82) | 1.377* (1.96) | 1.646* (1.67) | 1.461** (2.37) | 1.833** (2.49) | 5.313** (2.04) |
| NOL | −0.124*** (−2.84) | −0.242*** (−2.88) | −0.190*** (−2.94) | −0.0656** (−2.16) | −0.0396 (−1.30) | −0.129 (−1.12) |
| △NOL | 0.615*** (6.92) | 0.954*** (5.76) | 1.082*** (7.22) | 0.331*** (4.01) | 0.129 (1.52) | 0.645** (2.21) |
| Constant | 0.0875 (0.70) | −0.187 (−1.23) | −0.140 (−0.77) | 0.156 (1.50) | 0.316*** (2.66) | 0.227 (0.44) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 10880 | 11475 | 11475 | 11475 | 11475 | 11475 |
| R-squared | 0.515 | 0.599 | 0.563 | 0.550 | 0.477 | 0.411 |
| Adj. R-squared | 0.403 | 0.480 | 0.432 | 0.415 | 0.321 | 0.235 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification in column 1 and unconditional quantile regressions in columns 2–6. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is domestic corporate groups in the YRTTI tax return data. t statistics are in parentheses.
Table A5:
UQR results for the YRTTI sample of domestic standalone firms.
| OLS | Unconditional Quantile Regression | |||||
|---|---|---|---|---|---|---|
| (1) OLS | (2) Q10 | (3) Q25 | (4) Q50 | (5) Q75 | (6) Q90 | |
| Trend | −0.000578** (−2.31) | 0 (.) | −0.00176*** (−3.18) | −0.000543*** (−4.25) | −0.00128*** (−8.05) | −0.000536 (−0.92) |
| STR | 0.673*** (26.87) | 0 (.) | 0.724*** (12.26) | 0.712*** (52.69) | 0.399*** (25.89) | 0.602*** (10.14) |
| Controls for firm characteristics | ||||||
| Pre-tax income growth | −94.70*** (−7.14) | 0 (.) | −676.0*** (−30.72) | −49.18*** (−11.74) | 10.75** (2.08) | 324.9*** (13.20) |
| Log total assets | −0.00443*** (−4.50) | 0 (.) | 0.00564*** (2.58) | −0.00293*** (−6.07) | −0.00766*** (−13.18) | −0.0239*** (−11.33) |
| Fixed assets | −0.0378*** (−10.60) | 0 (.) | −0.0999*** (−13.20) | −0.0252*** (−14.64) | −0.0130*** (−6.05) | −0.0115 (−1.44) |
| ROA | −0.0471*** (−12.67) | 0 (.) | 0.196*** (23.73) | 0.0321*** (16.90) | −0.0666*** (−29.63) | −0.404*** (−44.58) |
| Debt-to-Equity | −0.0000515*** (−28.84) | 0 (.) | −0.000118*** (−29.01) | −0.0000168*** (−24.48) | −0.0000150*** (−20.95) | −0.0000413*** (−14.46) |
| Paid dividends | 0.192*** (23.01) | 0 (.) | 0.217*** (13.53) | 0.0785*** (18.33) | 0.263*** (38.99) | 0.214*** (9.47) |
| Controls for book-tax differences | ||||||
| Special items | 2.143*** (35.39) | 0 (.) | 4.479*** (32.90) | 0.758*** (30.11) | 0.678*** (22.58) | 2.240*** (16.88) |
| R&D expenses | −0.117 (−0.85) | 0 (.) | −0.448 (−1.37) | −0.0269 (−0.40) | 0.265*** (3.81) | 0.216 (0.72) |
| Intra-group interest payments | −1.467*** (−6.53) | 0 (.) | −3.310*** (−5.87) | −1.014*** (−9.80) | −0.821*** (−7.22) | −1.120*** (−2.59) |
| Statutory provisions | 0.713*** (2.66) | 0 (.) | 0.629 (1.11) | 0.0801 (0.68) | 0.228 (1.56) | 1.464** (2.45) |
| Δ Book-tax amortization diff. | −2.164*** (−15.68) | 0 (.) | −5.180*** (−16.75) | −1.044*** (−16.76) | −0.815*** (−11.79) | −2.946*** (−9.90) |
| Δ Book-tax depreciation diff. | −2.402*** (−4.43) | 0 (.) | −6.650*** (−4.94) | −1.652*** (−5.77) | −1.408*** (−3.99) | −0.937 (−0.78) |
| Received dividends | −0.0396*** (−4.64) | 0 (.) | 0.0965*** (5.68) | −0.0145*** (−3.07) | −0.282*** (−39.55) | −0.0204 (−0.86) |
| Contributions and subsidies | 3.222*** (19.49) | 0 (.) | 2.569*** (8.82) | 1.351*** (19.07) | 2.201*** (22.17) | 8.117*** (18.56) |
| NOL | −0.136*** (−23.02) | 0 (.) | −0.231*** (−19.27) | −0.0163*** (−7.78) | −0.0274*** (−11.32) | −0.132*** (−14.11) |
| △NOL | 0.512*** (43.17) | 0 (.) | 1.595*** (52.62) | 0.200*** (35.73) | 0.0620*** (10.34) | −0.0997*** (−4.28) |
| Constant | 0.197*** (4.60) | 0.0156 (.) | 0.0620 (0.42) | 0.111*** (7.13) | 0.307*** (16.79) | 0.527*** (11.27) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 159192 | 162102 | 162102 | 162102 | 162102 | 162102 |
| R-squared | 0.507 | − | 0.576 | 0.522 | 0.437 | 0.346 |
| Adj. R-squared | 0.432 | − | 0.502 | 0.440 | 0.340 | 0.233 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification in column 1 and unconditional quantile regressions in columns 2–6. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the domestic standalone firms in the YRTTI tax return data. t statistics are in parentheses.
Table A6:
Robustness of main results to the exclusion of control variables.
| (1) All firms | (2) Finnish MNEs | (3) Foreign MNEs | (4) Domestic groups | (5) Domestic firms | |
|---|---|---|---|---|---|
| Trend | −0.00221*** (−9.46) | −0.00579*** (−4.85) | −0.00185* (−1.76) | −0.00352*** (−3.19) | −0.00167*** (−6.68) |
| STR | 0.619*** (23.88) | 0.238* (1.76) | 0.642*** (6.53) | 0.560*** (4.71) | 0.649*** (23.09) |
| Constant | 0.0989** (2.51) | 0.186*** (2.83) | −0.0106 (−0.18) | 0.324*** (7.34) | 0.0667* (1.75) |
| Industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 194138 | 7004 | 13557 | 11475 | 162102 |
| R-squared | 0.0495 | 0.0917 | 0.0602 | 0.0675 | 0.0480 |
| Adj. R-squared | 0.0491 | 0.0824 | 0.0551 | 0.0614 | 0.0476 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Column 1 includes all firms, column 2 only Finnish owned multinationals, column 3 only subsidiaries of foreign owned multinationals located in Finland, column 4 only domestic corporate groups, and column 5 only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. t statistics are in parentheses.
Table A7:
Robustness of main results to the definition of received dividends.
| (1) All firms | (2) Finnish MNEs | (3) Foreign MNEs | (4) Domestic groups | (5) Domestic firms | |
|---|---|---|---|---|---|
| Trend | −0.000852*** (−3.67) | −0.00581*** (−4.31) | −0.00112 (−1.18) | −0.000650 (−0.54) | −0.000486** (−1.99) |
| STR | 0.657*** (28.29) | 0.342*** (2.59) | 0.603*** (7.12) | 0.751*** (6.67) | 0.682*** (27.27) |
| Controls for firm characteristics | |||||
| Pre-tax income growth | −93.72*** (−7.31) | 319.3 (1.57) | −157.5*** (−2.65) | 333.5** (2.15) | −93.68*** (−7.07) |
| Log total assets | −0.00385*** (−4.15) | 0.00492 (0.87) | −0.00158 (−0.44) | 0.00387 (0.69) | −0.00444*** (−4.52) |
| Fixed assets | −0.0366*** (−11.02) | −0.0256 (−1.31) | −0.0284** (−1.98) | −0.0799*** (−4.84) | −0.0349*** (−9.85) |
| ROA | −0.0460*** (−13.18) | −0.0246 (−0.97) | −0.0427*** (−3.06) | −0.109*** (−5.78) | −0.0446*** (−12.03) |
| Debt-to-Equity | −0.0000469*** (−29.27) | −0.0000201*** (−2.85) | −0.0000101** (−2.30) | −0.0000298*** (−4.12) | −0.0000516*** (−28.89) |
| Paid dividends | 0.165*** (27.16) | 0.208*** (3.66) | 0.107*** (7.42) | 0.201*** (5.13) | 0.171*** (25.24) |
| Controls for book-tax differences | |||||
| Special items | 1.767*** (34.86) | 0.641*** (5.20) | 1.365*** (10.08) | 1.033*** (5.85) | 2.154*** (35.64) |
| R&D expenses | −0.0907 (−0.84) | −0.104 (−0.40) | −0.0784 (−0.31) | −0.102 (−0.24) | −0.0693 (−0.50) |
| Intra-group interest payments | −1.968*** (−11.54) | −1.781*** (−2.96) | −2.376*** (−8.03) | −3.513*** (−4.43) | −1.441*** (−6.40) |
| Statutory provisions | 0.601*** (2.68) | −0.966 (−1.21) | 0.966** (2.03) | 2.427** (2.20) | 0.696*** (2.60) |
| Δ Book-tax amortization diff. | −2.053*** (−18.08) | −1.900*** (−6.24) | −1.584*** (−4.86) | −1.769*** (−5.43) | −2.175*** (−15.82) |
| Δ Book-tax depreciation diff. | −2.508*** (−5.93) | −2.467** (−2.47) | −3.165*** (−2.58) | −1.968 (−1.43) | −2.202*** (−4.11) |
| Tax-free dividends received | −1.510*** (−30.70) | −1.475*** (−13.73) | −1.284*** (−10.63) | −1.419*** (−15.00) | −1.520*** (−17.77) |
| Contributions and subsidies | 3.047*** (19.45) | 1.307* (1.65) | 2.431** (2.22) | 2.024*** (2.75) | 3.209*** (19.50) |
| NOL | −0.126*** (−23.96) | −0.102*** (−3.16) | −0.0826*** (−6.11) | −0.125*** (−2.84) | −0.136*** (−22.93) |
| △NOL | 0.501*** (44.48) | 0.467*** (5.47) | 0.377*** (8.14) | 0.633*** (7.24) | 0.509*** (42.89) |
| Constant | 0.202*** (4.50) | 0.139 (1.26) | −0.0239 (−0.21) | 0.0554 (0.45) | 0.194*** (4.50) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 190975 | 6723 | 13325 | 10880 | 159192 |
| R-squared | 0.511 | 0.557 | 0.565 | 0.530 | 0.509 |
| Adj. R-squared | 0.436 | 0.472 | 0.490 | 0.421 | 0.435 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Column 1 includes all firms, column 2 includes only Finnish-owned multinationals, column 3 includes only subsidiaries of foreign owned MNEs located in Finland, column 4 includes only domestic corporate groups, and column 5 includes only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the entire sample from YRTTI tax return data. t statistics are in parentheses.
Table A8:
Robustness of main results to the exclusion of book-tax differences possibly directly related to tax avoidance.
| (1) All firms | (2) Finnish MNEs | (3) Foreign MNEs | (4) Domestic groups | (5) Domestic firms | |
|---|---|---|---|---|---|
| Trend | −0.00146*** (−6.22) | −0.00792*** (−5.87) | −0.00117 (−1.21) | −0.00234* (−1.91) | −0.000986*** (−4.02) |
| STR | 0.634*** (27.21) | 0.284** (2.18) | 0.578*** (6.77) | 0.688*** (6.01) | 0.659*** (26.33) |
| Controls for firm characteristics | |||||
| Pre-tax income growth | −98.22*** (−7.62) | 348.9* (1.78) | −161.6*** (−2.73) | 372.6** (2.34) | −95.04*** (−7.14) |
| Log total assets | −0.00464*** (−4.95) | 0.00190 (0.33) | −0.00405 (−1.14) | 0.00201 (0.34) | −0.00489*** (−4.94) |
| Fixed assets | −0.0440*** (−13.11) | −0.0407** (−2.09) | −0.0565*** (−3.83) | −0.0887*** (−5.21) | −0.0392*** (−10.95) |
| ROA | −0.0572*** (−16.28) | −0.0581** (−2.29) | −0.0598*** (−4.23) | −0.144*** (−7.50) | −0.0520*** (−13.92) |
| Debt-to-Equity | −0.0000470*** (−29.36) | −0.0000221*** (−3.17) | −0.0000118*** (−2.64) | −0.0000304*** (−4.13) | −0.0000515*** (−28.91) |
| Paid dividends | 0.168*** (27.20) | 0.182*** (3.06) | 0.114*** (7.56) | 0.169*** (4.37) | 0.174*** (25.63) |
| Controls for book-tax differences | |||||
| Special items | 1.727*** (33.60) | 0.557*** (4.47) | 1.316*** (9.79) | 0.886*** (4.97) | 2.145*** (35.45) |
| NOL | −0.125*** (−23.76) | −0.0920*** (−2.76) | −0.0859*** (−6.25) | −0.118*** (−2.66) | −0.136*** (−22.97) |
| △NOL | 0.505*** (44.73) | 0.512*** (6.38) | 0.389*** (8.27) | 0.615*** (6.87) | 0.512*** (43.09) |
| Constant | 0.250*** (4.23) | 0.230** (2.07) | 0.0333 (0.26) | 0.108 (0.87) | 0.238*** (4.11) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 190975 | 6723 | 13325 | 10880 | 159192 |
| R-squared | 0.501 | 0.535 | 0.553 | 0.509 | 0.502 |
| Adj. R-squared | 0.425 | 0.446 | 0.476 | 0.396 | 0.427 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Column 1 includes all firms, column 2 includes only Finnish-owned multinationals, column 3 includes only subsidiaries of foreign owned MNEs located in Finland, column 4 includes only domestic corporate groups, and column 5 includes only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Thus, Trend receives values 0–15. All other variables are as defined in Section 4.2. The estimation sample is the entire sample from YRTTI tax return data. t statistics are in parentheses.
Table A9:
Robustness of the main results to inclusion of interaction terms (entire regression output).
| Finnish MNEs | Foreign MNEs | Domestic groups | Domestic firms | |||||
|---|---|---|---|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
| Trend | −0.0100*** (−6.25) | −0.00768*** (−5.38) | −0.00130 (−0.86) | −0.00237** (−2.32) | −0.00287* (−1.83) | −0.00208 (−1.62) | −0.0000492 (−0.17) | −0.000879*** (−3.42) |
| Post GFC | −0.0744 (−1.63) | −0.0715** (−2.27) | −0.0867** (−2.25) | 0.0499*** (5.78) | ||||
| I(2009-2010) | −0.276** (−2.22) | 0.0904 (1.20) | −0.0314 (−0.29) | −0.0164 (−0.71) | ||||
| I(2013-2015) | −0.0980 (−0.99) | 0.0995 (1.56) | −0.0677 (−0.81) | 0.0972***(4.94) | ||||
| Trend Post GFC | 0.00512** (2.00) | 0.00375** (2.02) | 0.00517** (2.39) | −0.00308*** (−6.40) | ||||
| Trend I(2009-2010) | 0.0158** (2.09) | −0.00603 (−1.32) | 0.00174 (0.27) | 0.000963 (0.69) | ||||
| Trend I(2013-2015) | 0.00522 (1.07) | −0.00468 (−1.47) | 0.00398 (0.97) | −0.00514*** (−5.30) | ||||
| STR | 0.394** (2.40) | 0.515*** (2.90) | 0.777*** (7.47) | 0.552*** (4.73) | 0.892*** (6.43) | 0.928*** (6.45) | 0.550*** (17.25) | 0.480*** (13.68) |
| Controls for firm characteristics | ||||||||
| Pre-tax income growth | 357.5* (1.81) | 355.5* (1.80) | −162.5*** (−2.75) | −164.5*** (−2.78) | 364.7** (2.30) | 364.1** (2.30) | −95.36*** (−7.20) | −94.88*** (−7.16) |
| Log total assets | 0.00414 (0.70) | 0.00354 (0.60) | −0.00232 (−0.65) | −0.00241 (−0.68) | 0.00409 (0.71) | 0.00390 (0.68) | −0.00474*** (−4.81) | −0.00467*** (−4.74) |
| Fixed assets | −0.0408** (−2.09) | −0.0368* (−1.88) | −0.0373** (−2.57) | −0.0367** (−2.53) | −0.0894*** (−5.28) | −0.0894*** (−5.28) | −0.0377*** (−10.58) | −0.0376*** (−10.54) |
| ROA | −0.0534** (−2.13) | −0.0582** (−2.32) | −0.0564*** (−4.02) | −0.0576*** (−4.11) | −0.136*** (−7.06) | −0.136*** (−7.08) | −0.0485*** (−13.02) | −0.0481*** (−12.91) |
| Debt-to-Equity | −0.0000218*** (−3.08) | −0.0000218*** (−3.10) | −0.00000899** (−2.04) | −0.00000880** (−2.00) | −0.0000295*** (−4.05) | −0.0000297*** (−4.07) | −0.0000516*** (−28.92) | −0.0000515*** (−28.87) |
| Paid dividends | 0.217** (2.45) | 0.235*** (2.69) | 0.136*** (5.41) | 0.139*** (5.66) | 0.192*** (3.79) | 0.197*** (3.89) | 0.205*** (23.70) | 0.202*** (23.57) |
| Controls for book-tax differences | ||||||||
| Special items | 0.556*** (4.55) | 0.559*** (4.59) | 1.340*** (9.79) | 1.336*** (9.80) | 0.951*** (5.36) | 0.950*** (5.35) | 2.145*** (35.43) | 2.143*** (35.39) |
| R&D expenses | −0.218 (−0.79) | −0.161 (−0.59) | −0.139 (−0.54) | −0.118 (−0.46) | −0.277 (−0.64) | −0.269 (−0.62) | −0.0630 (−0.45) | −0.0699 (−0.50) |
| Intra-group interest payments | −1.657*** (−2.74) | −1.777*** (−2.95) | −2.378*** (−7.82) | −2.393*** (−7.91) | −3.512*** (−4.35) | −3.510*** (−4.35) | −1.456*** (−6.47) | −1.460*** (−6.49) |
| Statutory provisions | −0.976 (−1.23) | −0.909 (−1.15) | 0.972** (2.03) | 1.008** (2.10) | 2.479** (2.20) | 2.494** (2.20) | 0.727*** (2.72) | 0.732*** (2.74) |
| Δ Book-tax amortization diff. | −1.688*** (−5.42) | −1.698*** (−5.48) | −1.567*** (−4.85) | −1.562*** (−4.84) | −1.720*** (−5.13) | −1.738*** (−5.18) | −2.183*** (−15.85) | −2.177*** (−15.79) |
| Δ Book-tax depreciation diff. | −3.218*** (−3.18) | −3.171*** (−3.12) | −4.053*** (−3.35) | −4.022*** (−3.31) | −2.641* (−1.89) | −2.592* (−1.85) | −2.229*** (−4.11) | −2.270*** (−4.19) |
| Received dividends | −0.0980 (−1.02) | −0.119 (−1.25) | −0.0442* (−1.71) | −0.0471* (−1.89) | −0.0387 (−0.75) | −0.0449 (−0.88) | −0.0606*** (−6.66) | −0.0548*** (−6.13) |
| Contributions and subsidies | 1.100 (1.36) | 1.118 (1.38) | 2.538** (2.32) | 2.556** (2.34) | 2.074*** (2.83) | 2.063*** (2.82) | 3.224*** (19.56) | 3.222*** (19.53) |
| NOL | −0.0928*** (−2.80) | −0.0926*** (−2.79) | −0.0822*** (−6.09) | −0.0814*** (−6.04) | −0.123*** (−2.85) | −0.123*** (−2.84) | −0.136*** (−22.94) | −0.136*** (−22.94) |
| Δ N O L | 0.506*** (6.13) | 0.501*** (6.05) | 0.368*** (7.89) | 0.369*** (7.93) | 0.610*** (6.88) | 0.611*** (6.87) | 0.512*** (43.20) | 0.512*** (43.22) |
| Constant | 0.183 (1.55) | 0.141 (1.17) | −0.0502 (−0.43) | 0.0384 (0.32) | 0.0396 (0.31) | 0.0243 (0.19) | 0.232*** (5.42) | 0.258*** (5.95) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| N | 6723 | 6723 | 13325 | 13325 | 10880 | 10880 | 159192 | 159192 |
| R-squared | 0.542 | 0.542 | 0.561 | 0.561 | 0.516 | 0.516 | 0.507 | 0.507 |
| Adj. R-squared | 0.453 | 0.454 | 0.484 | 0.485 | 0.404 | 0.404 | 0.433 | 0.433 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions. Columns 1 and 2 include only Finnish-owned multinationals, columns 3 and 4 include only subsidiaries of foreign owned MNEs located in Finland, columns 5and 6 include only domestic corporate groups and columns 7 and 8 include only domestic standalone firms. Trend is the linear time trend, defined as the tax year less of 2000, the first sample year. Trend receives values 0–15. Post GFC is an indicator which gets the value 1 after the year 2007. I(2009–2010) and I(2013–2015) are indicators which get the value 1 during years 2009–2010 and 2013–2015. Other variables are as defined in Section 4.2. t statistics are in parentheses.
Table A10:
Robustness of main results to inclusion of foreign affiliate control variables.
| (1) | (2) | (3) | (4) | (5) | |
|---|---|---|---|---|---|
| Trend | −0.00381* (−1.87) | −0.00381* (−1.88) | −0.00380* (−1.87) | −0.00381* (−1.88) | −0.00380* (−1.87) |
| STR | 0.445*** (2.76) | 0.445*** (2.76) | 0.444*** (2.75) | 0.448*** (2.78) | 0.448*** (2.77) |
| Controls for firm characteristics | |||||
| Pre-tax income growth | 386.1 (1.23) | 386.1 (1.23) | 386.5 (1.23) | 385.3 (1.23) | 385.5 (1.23) |
| Log total assets | −0.00800 (−1.16) | −0.00805 (−1.17) | −0.00794 (−1.15) | −0.00782 (−1.13) | −0.00772 (−1.12) |
| Fixed assets | −0.0669** (−2.54) | −0.0670** (−2.54) | −0.0669** (−2.54) | −0.0671** (−2.54) | −0.0669** (−2.54) |
| ROA | −0.00892 (−0.33) | −0.00896 (−0.33) | −0.00863 (−0.32) | −0.00919 (−0.34) | −0.00895 (−0.33) |
| Debt-to-Equity | −0.0000167* (−1.95) | −0.0000167* (−1.95) | −0.0000166* (−1.93) | −0.0000166* (−1.93) | −0.0000165* (−1.93) |
| Paid dividends | 0.896 (1.07) | 0.898 (1.08) | 0.891 (1.07) | 0.890 (1.07) | 0.884 (1.06) |
| Controls for book-tax differences | |||||
| Special items | 0.495*** (3.27) | 0.495*** (3.27) | 0.496*** (3.27) | 0.487*** (3.22) | 0.487*** (3.22) |
| R&D expenses | −0.119 (−0.42) | −0.120 (−0.42) | −0.116 (−0.41) | −0.123 (−0.43) | −0.119 (−0.42) |
| Intra-group interest payments | −1.446* (−1.84) | −1.447* (−1.85) | −1.457* (−1.86) | −1.525* (−1.94) | −1.528* (−1.94) |
| Statutory provisions | 0.0978 (0.11) | 0.107 (0.12) | 0.0903 (0.10) | 0.106 (0.12) | 0.0887 (0.10) |
| Δ Book-tax amortization diff. | −2.178*** (−6.72) | −2.177*** (−6.72) | −2.177*** (−6.72) | −2.172*** (−6.69) | −2.172*** (−6.70) |
| Δ Book-tax depreciation diff. | −2.743** (−2.28) | −2.751** (−2.26) | −2.710** (−2.22) | −2.721** (−2.19) | −2.688** (−2.16) |
| Received dividends | −0.914 (−1.09) | −0.916 (−1.09) | −0.908 (−1.08) | −0.908 (−1.08) | −0.901 (−1.07) |
| Contributions and subsidies | 0.737 (0.77) | 0.734 (0.76) | 0.742 (0.77) | 0.740 (0.77) | 0.749 (0.78) |
| NOL | −0.0836** (−2.24) | −0.0837** (−2.24) | −0.0835** (−2.24) | −0.0835** (−2.24) | −0.0834** (−2.23) |
| △NOL | 0.495*** (5.96) | 0.495*** (5.96) | 0.495*** (5.96) | 0.492*** (5.92) | 0.493*** (5.92) |
| Controls for foreign affiliate activities | |||||
| Has Tax Haven | 0.00157 (0.13) | 0.00250 (0.20) | |||
| Number of tax haven subsidiaries | −0.00164 (−0.53) | −0.000931 (−0.31) | |||
| Sales of subsidiaries | 6.10e-12*** (3.43) | 5.99e-12*** (3.31) | |||
| Employees of subsidiaries | −0.00000359*** (−2.83) | −0.00000351*** (−2.69) | |||
| Constant | 0.334** (2.28) | 0.335** (2.28) | 0.333** (2.27) | 0.331** (2.26) | 0.329** (2.25) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 4165 | 4165 | 4165 | 4165 | 4165 |
| R-squared | 0.576 | 0.576 | 0.576 | 0.576 | 0.576 |
| Adj. R-squared | 0.462 | 0.462 | 0.462 | 0.462 | 0.462 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different foreign affiliate controls. The sample is multinational firms for years 2007–2015. Column 1 shows the baseline result without additional controls. Columns 2 to 5 alter the set of included foreign affiliate controls. HasTaxHaven is an indicator variable which receives value one when the firm has at least one affiliate located in a tax haven country, defined according to Menkhoff & Miethe (2019). Number of tax haven subsidiaries is the observed absolute number of tax haven subsidiaries of the firm. Sales (Employees) of the subsidiaries is the aggregated sales (employees) of the foreign subsidiaries of the firm. Other variables are as defined in Section 4.2. t statistics are in parentheses.
Table A11:
OLS regressions of CASH ETR on trend for different sub-samples and with sample restricted to years 2007–2015.
| (1) All firms | (2) Finnish MNEs | (3) Foreign MNEs | (4) Domestic groups | (5) Domestic non-groups | |
|---|---|---|---|---|---|
| Trend | −0.00163*** (−4.89) | −0.00381* (−1.87) | −0.000377 (−0.32) | −0.000849 (−0.53) | −0.00159*** (−4.43) |
| STR | 0.616*** (22.27) | 0.445*** (2.76) | 0.644*** (6.70) | 0.654*** (4.88) | 0.632*** (21.23) |
| Controls for firm characteristics | |||||
| Pre-tax income growth | −46.01*** (−2.69) | 386.1 (1.23) | −55.12 (−0.78) | 517.3*** (2.91) | −49.33*** (−2.77) |
| Log total assets | −0.00710*** (−5.42) | −0.00800 (−1.16) | −0.00704* (−1.68) | 0.00162 (0.19) | −0.00674*** (−4.72) |
| Fixed assets | −0.0441*** (−9.89) | −0.0669** (−2.54) | −0.0308* (−1.93) | −0.0916*** (−4.23) | −0.0414*** (−8.54) |
| ROA | −0.0301*** (−6.92) | −0.00892 (−0.33) | −0.0393** (−2.52) | −0.107*** (−4.73) | −0.0259*** (−5.55) |
| Debt-to-Equity | −0.0000333*** (−17.79) | −0.0000167* (−1.95) | −0.00000831* (−1.78) | −0.0000350*** (−4.03) | −0.0000370*** (−17.35) |
| Paid dividends | 0.0558 (0.51) | 0.896 (1.07) | 0.0327 (1.28) | −0.144 (−0.14) | 0.0701 (0.56) |
| Controls for book-tax differences | |||||
| Special items | 1.676*** (25.49) | 0.495*** (3.27) | 1.343*** (9.26) | 0.868*** (4.62) | 2.138*** (25.39) |
| R&D expenses | −0.0529 (−0.48) | −0.119 (−0.42) | −0.0317 (−0.13) | −0.178 (−0.41) | −0.0126 (−0.09) |
| Intra-group interest payments | −1.918*** (−8.96) | −1.446* (−1.84) | −2.178*** (−6.62) | −3.308*** (−3.23) | −1.430*** (−4.33) |
| Statutory provisions | 0.464 (1.51) | 0.0978 (0.11) | 0.475 (0.87) | 1.009 (0.59) | 0.569 (1.40) |
| Δ Book-tax amortization diff. | −2.242*** (−17.73) | −2.178*** (−6.72) | −1.391*** (−3.93) | −2.075*** (−5.51) | −2.455*** (−15.69) |
| Δ Book-tax depreciation diff. | −1.510*** (−2.59) | −2.743** (−2.28) | −2.784** (−2.11) | −1.008 (−0.54) | −0.416 (−0.49) |
| Received dividends | 0.0325 (0.30) | −0.914 (−1.09) | 0.0464 (1.44) | 0.242 (0.24) | 0.0221 (0.18) |
| Contributions and subsidies | 4.764*** (19.46) | 0.737 (0.77) | 2.191 (1.59) | 2.299*** (2.62) | 5.205*** (19.70) |
| NOL | −0.118*** (−18.52) | −0.0836** (−2.24) | −0.0796*** (−5.11) | −0.0938** (−2.25) | −0.129*** (−17.76) |
| △NOL | 0.465*** (34.45) | 0.495*** (5.96) | 0.385*** (7.40) | 0.669*** (5.78) | 0.468*** (32.85) |
| Constant | 0.184*** (6.61) | 0.334** (2.28) | 0.107 (1.02) | 0.250 (1.58) | 0.228*** (6.73) |
| Firm & industry FE | Yes | Yes | Yes | Yes | Yes |
| N | 109311 | 4165 | 9910 | 6383 | 88347 |
| R-squared | 0.567 | 0.576 | 0.598 | 0.558 | 0.569 |
| Adj. R-squared | 0.472 | 0.462 | 0.509 | 0.423 | 0.474 |
[i] Notes: This table presents the results of estimating equation 1 with an ordinary least squares specification with different sample restrictions for years 2007–2015. Column 1 includes all firms, column 2 only Finnish owned multinationals, column 3 foreign owned subsidiaries located in Finland, column 4 domestic corporate groups, and column 5 domestic standalone firms. All variables are as defined in Section 4.2. t statistics are in parentheses.