Non-disclosure of geographic earnings can be a marker of income-shifting activities, new research out of the University of Toronto found.
US based, multinational corporations have not been required to disclose geographical earnings since 1998. Therefore, managers are able to move profits from high to low-tax foreign jurisdictions without the threat of exposure.
As a result, tax rates of non-disclosing companies are less than half of those that voluntarily disclose geographical earnings.
The report suggests tax dodging is more likely when companies avoid such disclosure.