EU Tax Observatory Seminar

Du 01/12/2023 de 12:00 à 13:00

Salle R1-14

OLBERT Marcel (London Business School)

CANCELLED

We construct a novel dataset to examine over fifty Russian oligarch companies’ global operations and equity investors in the period 2009-2021. We establish stylized facts and provide evidence on the efficacy of sanctions imposed after Russia’s aggression against the Ukraine in 2014 using difference-in-differences designs that compare sanctioned to nonsanctioned companies. First, the operational networks of oligarch companies are highly international and complex, with approximately 1,800 international subsidiaries and a disproportionate presence in tax haven countries. Second, oligarch companies increased the complexity of their organizational structures after the sanctions in 2014, in particular through tax haven entities. This effect is mitigated if tax haven countries have Country-by-Country Reporting information sharing agreements with sanctioning countries. Third, oligarch companies attract substantial equity capital from Western institutional investors. Fourth, while Western institutional investors have generally decreased their holdings in oligarch companies in recent years, sanctions imposed by the home countries ofWestern investors had no measurable impact on these investors’ holdings. Instead, Western investors increasingly hold oligarch companies’ equity through tax haven entities post-sanctions. Collectively, our findings suggest that the complex subsidiary network of oligarch companies and and their access to equity financing through tax havens allows oligarchs and their investors to conceal asset ownership and blunt the impact of global sanctions. Automatic information sharing between countries’ tax authorities can partially offset this effect.