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Income Shifting Incentives and Tax Haven Utilization: Evidence from Multinational U.S. Firms

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  • Richardson, Grant
  • Taylor, Grantley

Abstract

This paper examines the association between a series of income shifting incentives including multinationality, transfer pricing aggressiveness, thin capitalization, intangible assets and tax haven utilization. Our empirical analysis is based on a sample of 286 multinational U.S. firms over the 2006–2012 period (2002 firm-years). Our regression results show that multinationality, transfer pricing aggressiveness, thin capitalization and intangible assets are positively associated with tax haven utilization. Our results are consistent based on several robustness checks.

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  • Richardson, Grant & Taylor, Grantley, 2015. "Income Shifting Incentives and Tax Haven Utilization: Evidence from Multinational U.S. Firms," The International Journal of Accounting, Elsevier, vol. 50(4), pages 458-485.
    • Handle: RePEc:eee:accoun:v:50:y:2015:i:4:p:458-485
    DOI: 10.1016/j.intacc.2015.10.001
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    3. Ali Ahmed & Chris Jones & Yama Temouri, . "The relationship between MNE tax haven use and FDI into developing economies characterized by capital flight," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    4. Yanyan Ouyang & Chuanwang Sun & Xiaonan Wei & Chuangyu Xie, 2023. "Will Temperature Changes in the Host Country Reduce the Inflow of International Direct Investment? Micro Evidence from Chinese Listed Companies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 781-806, December.
    5. Mostafa Monzur Hasan & Ahsan Habib & Nurul Alam, 2021. "Asset Redeployability and Corporate Tax Avoidance," Abacus, Accounting Foundation, University of Sydney, vol. 57(2), pages 183-219, June.
    6. K. V. Mukundhan & Sreevas Sahasranamam & James J. Cordeiro, 2019. "Corporate investments in tax havens: evidence from India," Asian Business & Management, Palgrave Macmillan, vol. 18(5), pages 360-388, November.
    7. Paulina Sutrisno & Sidharta Utama & Ancella Anitawati Hermawan & Eliza Fatima, 2022. "Founder and Descendant vs. Professional CEO: Does CEO Overconfidence Affect Tax Avoidance in the Indonesia Case?," Economies, MDPI, vol. 10(12), pages 1-20, December.
    8. Abdullah Almutairi & Baban Eulaiwi & Robert Evans & Grantley Taylor, 2023. "Tax Haven Use and Related‐Party Transactions: Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 33(4), pages 352-374, December.
    9. Nor Shaipah Abdul Wahab, 2016. "Malaysian multinational companies (MNC): Permanent and temporary nature of tax planning," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1248644-124, December.
    10. Argilés-Bosch, Josep M. & Somoza, Antonio & Ravenda, Diego & García-Blandón, Josep, 2020. "An empirical examination of the influence of e-commerce on tax avoidance in Europe," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    11. Jones, Chris & Temouri, Yama & Cobham, Alex, 2018. "Tax haven networks and the role of the Big 4 accountancy firms," Journal of World Business, Elsevier, vol. 53(2), pages 177-193.

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    More about this item

    Keywords

    Income shifting; Tax havens; Multinationality; Transfer pricing; Thin capitalization; Intangible assets;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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