Tax Transparency Changes Where Firms Invest: Implications for Global and Local Tax Policies
Country-by-Country Reporting was designed to help tax authorities detect profit shifting by requiring multinationals to disclose detailed financial information across jurisdictions. But new research reveals an unexpected consequence: firms responded not just by changing accounting practices, but by reallocating real economic activity—moving tangible assets and employees to low-tax jurisdictions. This analysis examines how transparency regulations can reshape where companies invest and what that means for tax policy.