| Abstract [eng] |
73 pages, 10 figures, 10 tables, 57 references. This thesis is based on a comparative analysis of scientific literature, its synthesis, and regression analysis, aiming to examine the phenomena of profit and debt shifting effects in companies established in Lithuania and controlled by foreign entities. The thesis is structured into three main parts: a review of scientific literature, research methodology, and analysis of research findings. Additionally, it includes a summary of overall conclusions and recommendations. The literature review section explores the main theories of capital structure formation and their relevance to the research topic. It provides a summary of studies conducted by various scholars, identifying the key factors influencing corporate capital structure. Furthermore, the review examines the challenges of international corporate taxation and provides an overview of relevant scientific studies on this subject. Based on the literature analysis, the research methodology was designed to investigate the profit and debt shifting effects in companies established in Lithuania and controlled by foreign entities. The study involved three regression analyses. In the first and third analyses, the dependent variable is the natural logarithm of profit before tax (LNPBT), while in the second analysis, the dependent variable is the debt ratio. The results of the first regression analysis indicate that a 1% increase in the effective tax rate (ETR) leads to a decrease of -0,0097977 in the LNPBT of foreign-owned international group companies, confirming the existence of profit shifting. Conversely, the third regression analysis reveals that a 1% increase in ETR results in a 0,3354 increase in LNPBT for foreign-owned international group companies. These findings suggest that companies established in Lithuania and controlled by foreign or domestic capital exhibit different opportunities for tax optimization. The results of the second regression analysis indicate that as the gap between Lithuania's corporate tax rate and the tax rate in the country where the parent company of a Lithuanian group company is located grows larger, the debt ratio of the Lithuanian group company increases by 0,05913887. This indicates the presence of a debt shifting effect among companies established in Lithuania with foreign parent entities during the 2015–2022 period. Specifically, interest income is earned in low-tax jurisdictions and deducted in Lithuania, leveraging the tax shield mechanism. |
