Determinants of tax haven utilization: evidence from Australian firms

Abstract

This paper examines the major determinants of tax haven utilization based on a sample of 200 publicly listed Australian firms, over the 2006-2010 period (1,000 firm-years). Our regression results show that variables relating to transfer pricing, intangible assets, an interaction term between transfer pricing and intangible assets, withholding taxes, performance-based management remuneration and multinationality are positively associated with tax haven utilization. We also find that corporate governance structures are negatively associated with tax haven utilization. The magnitude and significance of the regression coefficients indicate that transfer pricing, withholding taxes, intangible assets, an interaction term between transfer pricing and intangible assets, corporate governance and multinationality are the most important drivers of tax haven utilization.

Tax Avoidance, Managerial Ability, and Investment Efficiency

“…Similar to Hanlon and Heitzman (), Taylor et al . () report that Australian firms in their sample utilize tax havens to increase the level of tax avoidance.…”

A review of accounting research in Australasia

“…Dallyn () examined the political salience of corporate tax avoidance, and Taylor et al . () assessed the determinants of tax haven utilisation.…”

Corporate investments in tax havens: evidence from India

“…Interest in the internationalization of emerging market multinational corporations (EM MNCs) continues to grow in the international business literature (Hernandez & Guillen, 2018;Paul & Benito, 2018;Sahasranamam, Rentala & Rose, 2019). However, with very few exceptions (e.g., Taylor, Richardson, & Taplin, 2015;Chari & Acikgoz, 2015;Lee, Hemmert & Kim, 2014) little is known, at the country level, about the patterns of investment and the many possible drivers of investment by EM MNCs in tax havens. This lack of knowledge is concerning from two standpoints.…”