Author

Ruoxi Shi

Year of Award

9-3-2018

Degree Type

Thesis

Degree Name

Master of Philosophy (MPhil)

Department

Department of Accountancy and Law.

Principal Supervisor

Chan, Raymond (Raymond Siu Yeung)

Keywords

International business enterprises;Taxation;China;Tax evasion

Language

English

Abstract

Multinational corporations (MNCs) around the globe commonly use cross-border related-party transactions (CRPTs) to shift profits from high tax jurisdictions to low ones to avoid paying taxes. The Organization for Economic Co-operation and Development and G20 countries launched the Base Erosion and Profit Shifting (BEPS) Action Plans in 2013 to constrain tax avoidance behaviors of MNCs, particularly the widespread use of CRPTs. This study examines how the localization of the BEPS Action Plans affects the tax avoidance behavior of MNCs in China. Using all the listed non-financial MNCs on the Stock Exchanges in China from 2012 to 2017, I find that: (1) Chinese MNCs with more CRPTs are more likely to pay less taxes than those with less CRPTs. Localization of the BEPS Action Plans does not have significant impact on this behavior. (2) The effect of localization of BEPS Action Plans to constrain corporate tax avoidance is more pronounced on MNCs with relatively poor information quality in the pre-location period; (3) local government-controlled firms (LG firms) with more CRPTs engage in more tax avoidance, but localization of the BEPS Action Plans significantly constrains tax avoidance activities by these firms in the post-location period. These findings should shed light on what mechanisms could constrain MNCs’ tax avoidance, especially income shifting through CRPTs, and how it could be affected by tightening of the tax laws on tax avoidance activities and by ownership structure in a developing country setting, in particular.

Comments

Principal supervisor: Raymond Siu Yeung Chan ; Thesis submitted to the Department of Accountancy and Law ; Thesis (M.Phil.)--Hong Kong Baptist University, 2018.

Bibliography

Includes bibliographical references (pages 37-42).

Available for download on Friday, February 26, 2021



Share

COinS