How AI can reveal corporate tax avoidance

When looking into the financial dealings of a company, the language used in its annual reports is an oft-overlooked yet important factor to consider. Annual reports provide a wealth of information about what is going on at a company, and the standardized language used in them makes it possible to analyze that data. What makes this data even more remarkable is the potential to uncover corporate tax avoidance by investigating the words or phrases used in these reports.

In the context of tax avoidance, many companies will use specific terminology such as “offshore investments”, “transfer pricing”, or “tax haven”. While these words may not direct flag tax avoidance, they could be indicative of such activity. By looking at the language used in an annual report, it’s possible to uncover companies who are attempting to reduce their exposure to taxes.

In addition to identifying these terms, it is also important to look at how they are used. Are they being described in a positive light or a negative one? Are they mentioned frequently or rarely? Do they occur alongside other concepts like “profits” or “costs”?

Investigating the words used in the annual reports of a company is the first step to uncovering their tax avoidance strategies. Corporations are becoming ever more creative with the way they structure their finances, and it is important for investors, regulators and tax collectors to study the annual report content in order to stay ahead of the curve.

By analysing the language used in annual reports, businesses and governments can uncover the secrets of corporate tax avoidance. In addition to government enforcement, regular investigation of the language used by companies will help deter them from attempting to game the system when it comes to taxes.






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