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The role of anti-tax avoidance in tax base flow and international tax competition

Author

Listed:
  • Zheng, Jiaxing
  • Bai, Sida
  • Gu, Cheng
  • Huang, Bihui
  • Xiong, Mengxu

Abstract

By constructing the profit shifting model for MNCs, this study uses transfer pricing rules and bilateral tax conventions to examine the impact of anti-avoidance system on a country's corporate income tax base. Based on the balanced panel data of 50 countries from 2000 to 2013, we use the SYS-GMM method and find that the transfer pricing rules of neighboring countries significantly reduces the tax base of a country, while the impact of bilateral tax agreements on a country's tax base is slight. During the sample period, the management level of international anti-avoidance is improved, while the degree of tax competition among countries becomes more intense. Moreover, we show that anti-avoidance measures can reduce the phenomenon of tax avoidance for intangible assets.

Suggested Citation

  • Zheng, Jiaxing & Bai, Sida & Gu, Cheng & Huang, Bihui & Xiong, Mengxu, 2024. "The role of anti-tax avoidance in tax base flow and international tax competition," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x2400060x
    DOI: 10.1016/j.pacfin.2024.102309
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    More about this item

    Keywords

    Anti-avoidance; Spillover effect; Base flow; International tax competition;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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