The Effect of Mandatory Financial Statement Disclosures of Tax Uncertainty on Tax Reporting and Collections: The Case of FIN 48 and Multistate Tax Avoidance

2014 ◽  
Vol 36 (2) ◽  
pp. 203-229 ◽  
Author(s):  
Sanjay Gupta ◽  
Lillian F. Mills ◽  
Erin M. Towery
Keyword(s):  
Tax Avoidance ◽  
Financial Statement ◽  
Fin 48 ◽  
Tax Reporting ◽  
Tax Uncertainty

Tax Avoidance and Tax Uncertainty

2019 ◽  
Vol 36 (1) ◽  
pp. 9-54
Author(s):  
JongIl Park ◽  
KyuAn Jeon
Keyword(s):  
Tax Avoidance ◽  
Tax Uncertainty

Financial-tax reporting conformity, tax avoidance and corporate social responsibility

2020 ◽  
Vol 18 (3) ◽  
pp. 639-659
Author(s):  
Abdullah Alsaadi
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Tax Avoidance ◽  
Negative Consequences ◽  
Data Set ◽  
Content Type ◽  
Aggressive Tax Avoidance ◽  
Tax Reporting ◽  
Corporate Social ◽  
The Impact

Purpose This study aims to investigate the effect of financial-tax reporting conformity jurisdictions on the association between corporate social responsibility (CSR) and aggressive tax avoidance. Design/methodology/approach Using a sample comprising firms domiciled in Europe for the period 2008–2016, this study uses regression analysis to test the impact of financial-tax reporting conformity jurisdictions on the association between CSR and aggressive tax avoidance. Findings The empirical results show that there is a positive association between CSR and tax avoidance, and firms headquartered in low financial-tax reporting conformity jurisdictions are more likely to engage in CSR to hedge against the potential negative consequences of aggressive tax-avoidance practices as compared to firms domiciled in countries with high level of financial-tax reporting conformity. Practical implications This study confirms Sikka’s (2010, 2013) view of “organised hypocrisy” act committed by firms to cover their socially irresponsible activities of aggressive tax avoidance by engaging in CSR. Results have implication for various regulatory bodies and investors in that the type of financial-tax conformity does impact the link between CSR and tax avoidance, and based on that, CSR firms may engage in CSR to overcome any negative reactions that could be caused as a result of tax avoidance. Originality/value To the best of the author’s knowledge, this study is the first to investigate the impact of financial-tax reporting conformity jurisdictions on the association between CSR and aggressive tax avoidance. This study also contributes to the literature in that, it uses an alternative data set which offers a more objective assessment of CSR measure and covers multiple countries.

scholarly journals When Does Tax Avoidance Result in Tax Uncertainty?

2018 ◽  
Vol 94 (2) ◽  
pp. 179-203 ◽  
Author(s):  
Scott D. Dyreng ◽  
Michelle Hanlon ◽  
Edward L. Maydew
Keyword(s):  
Transfer Pricing ◽  
Tax Avoidance ◽  
Pricing Strategies ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Time Period ◽  
Tax Haven ◽  
Tax Benefits ◽  
Tax Uncertainty

ABSTRACT We investigate the relation between tax avoidance and tax uncertainty, where tax uncertainty is the amount of unrecognized tax benefits recorded over the same time period as the tax avoidance. On average, we find that tax avoiders, i.e., firms with relatively low cash effective tax rates, bear significantly greater tax uncertainty than firms that have higher cash effective tax rates. We find that the relation between tax avoidance and tax uncertainty is stronger for firms with frequent patent filings and tax haven subsidiaries, proxies for intangible-related transfer pricing strategies. The findings have implications for several puzzling results in the literature.

Seeking Shelter: Empirically Modeling Tax Shelters Using Financial Statement Information

2010 ◽  
Vol 85 (5) ◽  
pp. 1693-1720 ◽  
Author(s):  
Petro Lisowsky
Keyword(s):  
Financial Statement ◽  
Tax Rates ◽  
Corporate Tax ◽  
Effective Tax Rates ◽  
Tax Havens ◽  
Tax Aggressiveness ◽  
Fin 48 ◽  
Tax Shelter ◽  
Long Run ◽  
Tax Shelters

ABSTRACT: Using confidential tax shelter and tax return data obtained from the Internal Revenue Service, this study develops and validates an expanded model for inferring the likelihood that a firm engages in a tax shelter. Results show that tax shelter likelihood is positively related to subsidiaries located in tax havens, foreign-source income, inconsistent book-tax treatment, litigation losses, use of promoters, profitability, and size, and negatively related to leverage. Supplemental tests show that total book-tax differences (BTDs) and the contingent tax liability reserve are significantly related to tax shelter usage, while discretionary permanent BTDs and long-run cash effective tax rates are not. Finally, the model is weaker, yet still significant, in the FIN 48 disclosure environment. This research provides investors and policymakers with an extended, validated measure to calculate the presence of extreme cases of corporate tax aggressiveness. Such information could also aid analysts and other tax and non-tax researchers in assessing the benefits and risks of firm behavior.

scholarly journals Use of Financial Ratios in selecting entities for Tax Audit purposes – empirical study in Albania

2021 ◽  
Vol 17 ◽  
pp. 297-313
Author(s):  
Rezarta Shkurti ◽  
Elena Myftaraj ◽  
Elsia Gjika
Keyword(s):  
Financial Reporting ◽  
Tax Evasion ◽  
Tax Avoidance ◽  
Binary Logistic Regression ◽  
Financial Statements ◽  
Financial Ratios ◽  
Risk Indicators ◽  
Economic Entity ◽  
Tax Audit ◽  
Tax Reporting

Information from financial statements and reported financial ratios have long been used to detect common phenomenon such as fraudulent financial statements, earnings management, and the relation between financial ratios and the level of tax risk of an entity. The focus of this study is to research the use of financial ratios that entities declare, in the detection of the magnitude of tax avoidance. In this paper we apply a binary logistic regression to detect which financial statement ratios differentiate between tax evading and non-tax evading entities. We analyse data from 183 tax audited Albanian entities for 2015 and 2016 accounting years and calculate several financial ratios to determine the level of tax risk based on the tax evasion magnitude found by the tax audit of these entities. We apply univariate and multivariate analysis and find several important ratios that can indicate quite accurately the high risk of tax audit of an economic entity. We suggest including these ratios as risk indicators or “red flags” in the selection procedures employed by the tax auditors. As tax reporting and financial reporting have similarities across countries of the region, our findings may be useful for other Southern Eastern European Countries as well.

scholarly journals The Usefulness Of The Tax Avoidance Proxy: Evidence From Korea

2016 ◽  
Vol 32 (2) ◽  
pp. 607
Author(s):  
Hyun-Ah Lee
Keyword(s):  
Financial Reporting ◽  
Tax Avoidance ◽  
Tax Planning ◽  
Large Set ◽  
Tax Shelters ◽  
Simultaneous Management ◽  
Tax Reporting ◽  
Tax Costs

This study aims to verify the usefulness of the tax avoidance proxy developed by Desai and Dharmapala (2006) in the setting where accounting-tax alignment is relatively high and aggressive tax planning is restricted. By using a large set of firms in Korea, I empirically test whether the tax avoidance proxy detects the management of book-tax and book-only accruals. My findings show that downward management of book-tax accruals for tax reporting purposes is not detected by the tax avoidance proxy. However, upward management of book-only accruals for financial reporting purposes is captured by the tax avoidance proxy. In addition, the tax avoidance proxy better detects simultaneous management of two accrual components than management of book-tax accruals alone. Lastly, the tax avoidance proxy is more powerful in detecting tax avoidance activities in a sample of firms with high tax and financial reporting costs than in firms that carry high tax costs but low financial reporting costs. The results of this study imply that the tax avoidance proxy can be a good indicator only when used for firms that are conscious of their financial reporting costs and have incentive to manage both taxable and book income at the same time under the setting where book-tax conformity is high and aggressive tax shelters are restricted. This study sheds light on the usefulness of the tax avoidance proxy which has been widely used in the accounting studies and provides a caveat to researchers that the proxy should be employed with caution and in appropriate setting. 

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