scholarly journals Environmental regulation and corporate tax avoidance—Evidence from China

PLoS ONE ◽  
2022 ◽  
Vol 17 (1) ◽  
pp. e0261037
Author(s):  
Xiaokang Yang ◽  
Junbing Xu ◽  
Minling Zhu ◽  
Yinglong Yang
Keyword(s):  
Environmental Regulation ◽  
Tax Evasion ◽  
Emissions Trading ◽  
Tax Avoidance ◽  
Cash Flows ◽  
Difference In Difference ◽  
Corporate Tax ◽  
Carbon Emissions Trading ◽  
Industry Competition ◽  
High Degree

In this study, we used a difference-in-difference (DID) approach to analyze the effect of environmental regulation on corporate tax avoidance behavior based on China’s carbon emissions trading pilot policy of 2013. Our findings were as follows: (1) Environmental regulation has led companies to adopt further tax evasion behaviors. Furthermore, the core conclusion was confirmed after a series of robust and endogenous tests, such as parallel trends and PSM-DID (propensity score matching-difference-in-difference). (2) Environmental regulations increase tax avoidance activities by reducing corporate cash flows. (3) The influence of environmental regulation on firm tax evasion is highly pronounced among non-state-owned enterprises, big-scale enterprises, and enterprises with a high degree of industry competition.

scholarly journals Does the Carbon Emissions Trading Policy Increase Corporate Tax Avoidance? Evidence from China

2022 ◽  
Vol 9 ◽  
Author(s):  
Chen Feng ◽  
Xingshu Zhu ◽  
Yu Gu ◽  
Yuecheng Liu
Keyword(s):  
Environmental Regulation ◽  
Carbon Emissions ◽  
Emissions Trading ◽  
Natural Experiment ◽  
Tax Avoidance ◽  
Financing Constraints ◽  
Corporate Tax ◽  
Government Subsidies ◽  
Carbon Emissions Trading ◽  
A Company

Based on the natural experiment of carbon emissions trading pilots in China, this paper investigates the effect of environmental regulation on corporate tax avoidance. The results show that: 1) Market-incentivized environmental regulation significantly increase the level of corporate tax avoidance. 2) Heterogeneity analysis shows that the effect is more obvious on the non-state-owned firms, firms with severe financing constraints, and firms in highly competitive industries. 3) We find that the reduction of cash flow is the channel for environmental regulation to affect corporate tax avoidance. 4) Further analysis shows that government subsidies can alleviate the enhancement of tax avoidance by environmental regulation. The more government subsidies a company receives, the less tax avoidance it has.

scholarly journals The Effect of Corporate Tax Avoidance on the Cost of Equity

2016 ◽  
Vol 91 (6) ◽  
pp. 1647-1670 ◽  
Author(s):  
Beng Wee Goh ◽  
Jimmy Lee ◽  
Chee Yeow Lim ◽  
Terry Shevlin
Keyword(s):  
Information Quality ◽  
Tax Avoidance ◽  
Cash Flows ◽  
Equity Capital ◽  
Testable Hypothesis ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Corporate Tax ◽  
Long Run ◽  
The Cost

ABSTRACT Based on Lambert, Leuz, and Verrecchia's (2007) derivation of the cost of equity capital in terms of expected cash flows, we generate a testable hypothesis that relates tax avoidance to a firm's cost of equity capital. Using three broad measures of tax avoidance—book-tax differences, permanent book-tax differences, and long-run cash effective tax rates—to test our hypothesis, we find that the cost of equity is lower for tax-avoiding firms. This effect is stronger for firms with better outside monitoring, firms that likely realize higher marginal benefits from tax savings, and firms with higher information quality. Overall, our results suggest that equity investors generally require a lower expected rate of return due to the positive cash flow effects of corporate tax avoidance. JEL Classifications: G32; H26; M41.

Ending the Tax Haven Scandals

2009 ◽  
Vol 9 (3) ◽  
pp. 1850175 ◽  
Author(s):  
Robert T. Kudrle
Keyword(s):  
Tax Evasion ◽  
Income Tax ◽  
Tax Avoidance ◽  
Personal Income Tax ◽  
Corporate Tax ◽  
Formula Apportionment ◽  
Automatic Information ◽  
Tax Haven ◽  
The World ◽  
Taking Action

States around the world appear more determined than ever to end tax haven abuse. The new U.S. administration, for example, is taking action against both major tax haven problems: corporation income tax avoidance and personal income tax evasion. Some progress may be made. This essay argues, however, that only radically new policy will likely suffice either to shore up corporate tax revenues or to sharply diminish evasion. Global formula apportionment is needed if the corporate income tax is to be preserved, and only a combination of automatic information sharing among governments and source withholding can stamp out evasion. As in most areas of international economic policy, U.S. leadership is essential.

scholarly journals The Effect of Public Share Ownership on Tax Evasion: Study on Companies Listed in Indonesia Stock Exchange Between 2008-2011

2019 ◽  
Vol 10 (6) ◽  
pp. 124
Author(s):  
Muhammad Ikbal Abdullah ◽  
Andi Chairil Furqan ◽  
Ni Made Suwitri Parwati ◽  
Asmanurhidayani Asmanurhidayani
Keyword(s):  
Tax Evasion ◽  
Management Practices ◽  
Tax Avoidance ◽  
Public Ownership ◽  
Corporate Tax ◽  
Public Companies ◽  
Share Ownership ◽  
The Government ◽  
The Impact ◽  
Public Share

Increasing the concentration of ownership and control of public companies in Indonesia is more likely to increase the likelihood of earnings management practices through tax avoidance. The high percentage of concentrated ownership has encouraged the government and capital market regulators to more broadly promote regulations related to tax incentives and public ownership in order to encourage more transparent practices. This study aims to analyze the policy of public ownership of tax avoidance conducted by Indonesian public companies, specifically after the regulation of Government Regulation No. 81 of 2007 concerning Reduction of Income Tax Rates for Domestic Corporate Taxpayers in the Form of Public Companies, and Minister of Financial Regulation No. 238 / PMK.03 / 2008 concerning Procedures for Implementing and Supervision of Granting Tariff Reductions for Domestic Corporate Taxpayers in the Form of Public Companies. More specifically, this study aims to analyze the impact of public share ownership on tax avoidance by Indonesian public companies. The samples of 320 observations that conducted (firm-years) during 2008-2011. The software that will be used in data analysis is STATA 12. The results showed that the increase in public ownership have a significant effect in improve the practice of corporate tax avoidance, which it is also evidenced by the significant differences in the corporate tax avoidance practices before than after the enactment of these regulations. The findings show that the greater the proportion of public share ownership would result the decreasing number of ETR or ETRC which can be indicated that the greater the practice of corporate tax avoidance. Furthermore, the ROA variable has a negative and significant effect on corporate tax avoidance practices, meaning that the greater the profitability ratio of a company can cause the reported and paid tax burden to decrease.

scholarly journals Is Incorporation the Solution to the Enigma of Corporate Tax Residency for International Tax Purposes?

2020 ◽  
Vol 7 (4) ◽  
pp. 35-47
Author(s):  
Charles Edward Andrew Lincoln
Keyword(s):  
Tax Evasion ◽  
Tax Avoidance ◽  
The United States ◽  
Vertical Equity ◽  
Corporate Tax ◽  
Economic Reality ◽  
International Tax ◽  
And Control ◽  
Jobs Act ◽  
Central Management

Incorporation of a company for testing residency—if applied uniformly—is likely the best and most accurate way to reflect corporate residency for tax purposes. However, it does not always reflect economic reality. There is not a consensus on what the best approach is. The Organization for Economic Cooperation and Development (“OECD”) countries overwhelmingly use three tests for residency: incorporation, central management and control, and domicile. Indeed, a court in the United States or other jurisdictions may often ask if tax-avoidance motives exist when incorporation occurs in one jurisdiction and central management and control occurs in another. This Article follows the 2017 Tax Cuts and Jobs Act on many international tax provisions that caused a shift in thinking at both the U.S. level, and at the international level in terms of deciding what formulations would be the best way to ensure proper taxation while promoting horizontal and vertical equity. The genesis of this Article is a response and critique of an article on the same subject by the same author: Charles Edward Andrew Lincoln IV, Is Incorporation Really Better Than Central Management and Control for Testing Corporate Residency? An Answer to Corporate Tax Evasion and Inversion, 43 Ohio N.U. L. Rev. 359 (2017). The author now critiques the point of that article and comes to a different conclusion based on different criteria: specifically, new case law, Musgrave’s economic theory of accretion of wealth, and the importance of substance-over-form doctrines.

scholarly journals Literature Review of Antecedents of Corporate Tax Avoidance in Indonesia

2021 ◽  
Vol 3 (3) ◽  
pp. 243-248
Author(s):  
Yuliana ◽  
Agus Munandar
Keyword(s):  
Literature Review ◽  
Tax Evasion ◽  
Audit Quality ◽  
Public Awareness ◽  
Tax Avoidance ◽  
Journal Articles ◽  
Corporate Tax ◽  
The Public ◽  
Research Findings ◽  
Positive Effect

Taxes are critical for the country's development because they generate revenue used to expand the Indonesian economy. The Corona Virus outbreak has shocked the public during the government's campaign to raise public awareness about the importance of paying taxes. Despite the Covid-19 pandemic, the company continues to pay taxes and thus avoids spending taxes. The purpose of this study is to examine the factors that may influence tax evasion by Indonesian manufacturing firms. This study employs qualitative research in conjunction with a literature review or a method of literature review. The researchers identified and analyzed 18 peer-reviewed journal articles over three years (2019-2021). According to the research findings, firm size, leverage, committee composition, and audit quality all have a significant positive effect on tax avoidance. Because researchers consider businesses to be taxpayers, it's natural that if the objective is to maximize profits, this tax avoidance action will become more aggressive during the pandemic.

scholarly journals Board Level Employee Representation and Tax Avoidance in Europe

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Sigurt Vitols
Keyword(s):  
Tax Evasion ◽  
Large Scale ◽  
Policy Issue ◽  
Tax Avoidance ◽  
Policy Implications ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Voting Power ◽  
Employee Representation ◽  
Board Level

AbstractIn part due to recent disclosures of large-scale tax evasion (e.g. Panama Papers), corporate tax avoidance has become a prominent public policy issue around the world. An increasing amount of research on this topic has focused on identifying the determinants of tax avoidance at the company and country level. Many newer studies examine differences in corporate governance as one of these determinants. However, this literature almost entirely neglects the role of board level employee representation (BLER), despite the fact that this form of ‘stakeholder governance’ is widespread in Europe. This paper addresses this gap in the literature by examining the relationship between BLER and tax avoidance at the company level. Two mechanisms are identified through which BLER might influence corporate tax behavior: 1) reduction in agency costs through monitoring and 2) the voting power of workers as board members to enter into coalitions with management and/or shareholders. Based on a sample of 2343 European listed companies between 2012 and 2017, this paper shows that companies with BLER have a higher effective tax rate (ETR) than companies without workers on the board. The analysis suggests that the ability to form coalitions through voting power is a more significant channel for influencing tax behavior than the monitoring mechanism. The policy implications are that governments should consider ‘stakeholder governance’ such as BLER as one measure supporting their efforts to combat tax avoidance.

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