ATP Identifi cation Using Balance of Payments Data: Case of the Czech Republic
ATP Identifi cation Using Balance of Payments Data: Case of the Czech Republic

Summary/Abstract: Multinational enterprises apply aggressive tax planning (ATP) to optimize global tax liabilityusually by combining parameters of different tax systems in both national jurisdictions anddouble tax treaties. At a macroeconomic level, the implementation of various optimizationschemes affects the given values of the balance of payments. By conducting econometricanalysis, the present paper examines the extent to which selected optimization schemescan be traced in the Czech Republic’s balance of payments. The results show that paymentsfor counselling services and royalties flow mostly to locations with low corporate taxrates, which may suggest an attempt to shift the tax base. Moreover, dividend and interestyields tend to move to countries with high foreign direct investments (FDIs) and balancedratios between FDIs received and made, indicating that they are only conduit (transit)countries through which profits are transferred to another destination.

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