The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms

Taylor, Grantley; Richardson, Grant

doi:10.1016/j.intaccaudtax.2013.02.005

Cited by 62 publications

(100 citation statements)

References 63 publications

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“…As regards leverage and ETR, in general terms, the above hypothesis and sub-hypotheses are based on the previous international research, which finds that the leverage of multinational corporations may be evidence of thin capitalisation of separate group entities and of tax management to reduce the corporate income tax burden and, hence, ETR (Buettner et al, 2012;Feld et al, 2013;Lanis & Richardson, 2012;Lin et al, 2014;Overesch & Wamser, 2010Taylor et al, 2011;Taylor & Richardson, 2013).…”

Section: Hypotheses and Methodologymentioning

confidence: 99%

“…The use of external factors has been tested and, in certain occasions, found to influence the level and quality of disclosure for CSR or income tax purposes (Bonsón & Bednárová, 2015;Lopes, 2014;Michelon et al, 2014;Pereira, 2013;Bouten et al, 2011;Henriques, 2011) and tax aggressiveness (Laguir et al, 2015;Taylor & Richardson, 2013;Lisowsky et al, 2013;Hoi et al, 2013;Huseynov & Klamm, 2012;Hope et al, 2013;Lanis & Richardson, 2012). For the purposes of this study, size is measured as total assets, profitability as return on assets and leverage was calculated as total long-term liabilities divided by total assets.…”

Section: Código Descriçãomentioning

confidence: 99%

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Income Tax of Portuguese Listed Companies in Financial and Corporate Social Responsibility Reports

Neves¹,

Albuquerque²

2019

RBGN

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Purpose -The purpose of the study was to evaluate reporting for income tax from a social responsibility perspective. Specifically, the research aims to ascertain the relationship between various aspects of income tax disclosure, namely its extent, effective tax rate and reporting for tax in corporate social responsibility reports, and various factors such as size, profitability, leverage and sector.Design/methodology/approach -Data collected from financial and corporate social responsibility reports covering the 2010-2014 period of entities included in the Portuguese Stock Index (PSI) 20 were used to build two indices. Using the logistic regression technique to assess the data gathered for two models, the indices were used as the dependent variables within the first model, and the effective tax rate was used in the second one. Size, profitability, leverage, sector and the effective tax rate were chosen as independent variables.Findings -The findings demonstrate the existence of a relationship between disclosure indices and size (positive), leverage (negative) and sector (negative). For the effective tax rate, only sector revealed a significant positive relationship.Originality/value -The study contributes to the relatively novel idea of viewing income taxes as a matter of corporate social responsibility, by focussing on reporting. To the best of the authors' knowledge, the study is unique in analysing the data collected from the corporate social responsibility perspective.

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Section: Hypotheses and Methodologymentioning

confidence: 99%

Section: Código Descriçãomentioning

confidence: 99%

Income Tax of Portuguese Listed Companies in Financial and Corporate Social Responsibility Reports

Neves¹,

Albuquerque²

2019

RBGN

View full text Add to dashboard Cite

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“…avoidance (e.g., Dyreng et al 2010;Delgado et al 2012;Boone, Khurana, and Raman 2013;Chyz, Leung, Li, and Rui 2013;Taylor and Richardson 2013). However, in all of these studies on firm characteristics, a large portion of cross-sectional variation in ETRs remains unexplained.…”

Section: Identification Of Tax Avoidancementioning

confidence: 99%

The Three Hurdles of Tax Planning: How Business Context, Aims of Tax Planning, and Tax Manager Power Affect Tax Expense

Feller

Schanz

2016

Contemporary Accting Res

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The question of why some companies pay fewer taxes than others is a widely investigated topic of interest. One of the well-known explanations is a phenomenon called tax avoidance.We develop a grounded theory model of influences on corporate tax planning through a series of 19 in-depth German tax expert interviews. Our research identifies three independent hurdles in the tax planning process, which can help to explain different levels of tax expense across companies. Those three hurdles sequentially address which tax planning methods are available (defined by business characteristics), desirable (given via aims of tax planning), and implementable (determined by tax manager power). A large part of previous research has estimated the influence of firm characteristics, which we incorporate in the broader term business characteristics, on tax expense, while the other influences that we identify have largely been left "out of the equation." In the light of the current public debates on tax avoidance, we reveal two important findings: First, we find that companies vary widely in the aggressiveness of their aims of tax planning, which contrasts sharply with the picture often drawn by undifferentiated media reports. Second, tax managers can assume very different levels of power in their organization. The implementation of desirable tax planning methods varies depending on this level of tax manager power. In conclusion, our three-hurdle grounded theory provides generalizable insights into important influences on corporate tax planning which help to explain the observed variation in tax expenses across firms.Les trois obstacles a la planification fiscale : comment le contexte d'entreprise, les objectifs de la planification fiscale et le pouvoir de la direction de la fiscalit e influent sur la charge d'impôt A la lumi ere des d ebats publics actuels sur l' evitement fiscal, les auteures font deux constatations importantes. En premier lieu, elles observent que les entreprises diff erent largement quant a l'audace de leurs objectifs de planification fiscale, ce qui contraste radicalement avec le portrait souvent trac e dans les reportages sch ematiques des m edias. En second lieu, les directions de la fiscalit e peuventêtre investies de pouvoirs tr es diff erents au sein des organisations. La mise en oeuvre de m ethodes de planification fiscale souhaitables varie selon l'ampleur de ces pouvoirs. En conclusion, la th eorie des trois obstacles, fond ee sur les donn ees, que proposent les auteurs livre des indications pouvantêtre g en eralis ees en ce qui a trait aux influences importantes auxquelles est soumise la planification fiscale de l'entreprise, ce qui contribue a expliquer la disparit e observ ee dans les charges d'impôt des entreprises.

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“…The interest conflict highlighted in present research is the conflict between corporate management and tax authorities as representatives of the Government. This conflict occurs because corporate management attempts to avoid payment through thin capitalization (high DER) (Taylor and Richardson, 2013;Lietz, 2014), while the Government intends to optimize tax revenue from firms by supressing thin capitalization through the enactment of the Minister of Finance Decree Number 169/ PMK. 010/2015 (MFD-169).…”

Section: Introductionmentioning

confidence: 99%

“…Thin capitalization is one way to avoid tax (Taylor & Richardson, 2013;Lietz, 2014). Corporations apply thin capitalization that is characterized with the tendency of higher debt-to-equity ratio to lead to a higher level of tax avoidance.…”

Section: Introductionmentioning

confidence: 99%

Will Problems Arise When Banks are Exempted from Thin Capitalization Regulation?

Saragih

2018

JEM

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This research was intended to provide empirical evidences that the exemption of banks from Minister of Finance Decree Number 169/PMK.010/2015 did not raise any significant problem on banks tax avoidance which was measured by effective tax rates. Quantitative method was used in this study by conducting regression-fixed effects method on unbalanced panel data. This study found that thin capitalization in banks did not impact effective tax rates significantly. Present research also found that the banks size and profitability were other determinants of the level of tax avoidance in the banks sample. Bank size and profitability had a significant and negative effect on effective tax rate.

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The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms

Cited by 62 publications

References 63 publications

Income Tax of Portuguese Listed Companies in Financial and Corporate Social Responsibility Reports

Income Tax of Portuguese Listed Companies in Financial and Corporate Social Responsibility Reports

The Three Hurdles of Tax Planning: How Business Context, Aims of Tax Planning, and Tax Manager Power Affect Tax Expense

Will Problems Arise When Banks are Exempted from Thin Capitalization Regulation?

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