IDEAS home Printed from https://ideas.repec.org/a/aiy/jnljtr/v9y2023i1p98-100.html
   My bibliography  Save this article

The influence of foreign ownership on tax avoidance in Thailand: A study from an emerging economy

Author

Listed:
  • Muhammad Syukur
  • Chatrudee Jongsureyapart

Abstract

Tax avoidance is an effort to avoid paying more taxes lawfully, but it results in a tax revenue loss for the government. Even though the nominal avoided tax is enormous in advanced economies, the impact of tax avoidance is more severe in emerging economies. Thailand is a developing country whose government has been actively putting action to tackle aggressive tax avoidance. Like other similar economies, Thailand invites more foreign investors to invest in its local businesses. However, literature has said that ownership level can influence tax avoidance, and ownership by foreign shareholders in emerging countries can increase tax avoidance. Thus, examining whether foreign ownership increases tax avoidance in a developing country is crucial and interesting. By owning shares in the company, foreign investors have the power to influence the firm’s decision-making process, including the decision for tax avoidance. This paper is the pioneer in discussing foreign ownership and tax avoidance in a Thai setting in its 100 most profitable companies. The observation is based on the five-year observations during 2015–2019. We measured tax avoidance using effective tax rate (ETR) and cash-flow ETR and manually collected foreign ownership data from the 500 annual reports. The statistical test verified that foreign ownership has a positive relationship with tax avoidance, which means that greater foreign ownership leads to a greater level of tax avoidance. This study recommends policymakers monitor the level of foreign ownership/control to limit aggressive tax avoidance that could be practised in the country.

Suggested Citation

  • Muhammad Syukur & Chatrudee Jongsureyapart, 2023. "The influence of foreign ownership on tax avoidance in Thailand: A study from an emerging economy," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 9(1), pages 98-100.
    • Handle: RePEc:aiy:jnljtr:v:9:y:2023:i:1:p:98-100
    DOI: https://doi.org/10.15826/jtr.2023.9.1.131
    as

    Download full text from publisher

    File URL: https://taxreform.ru/fileadmin/user_upload/site_15907/2023/Syukur_Jongsureyapart.pdf
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.15826/jtr.2023.9.1.131?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    2. repec:zbw:bofrdp:2016_026 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," Working Papers halshs-01179445, HAL.
    2. Arun Advani & William Elming & Jonathan Shaw, 2023. "The Dynamic Effects of Tax Audits," The Review of Economics and Statistics, MIT Press, vol. 105(3), pages 545-561, May.
    3. Paul E. Carrillo & M. Shahe Emran & Anita Rivadeneira, 2011. "Do Cheaters Bunch Together? Profit Taxes, Withholding Rates and Tax Evasion," Working Papers 2011-03, The George Washington University, Institute for International Economic Policy.
    4. Montalvo, José G. & Piolatto, Amedeo & Raya, Josep, 2020. "Transaction-tax evasion in the housing market," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    5. Oguzhan Akgun & David Bartolini & Boris Cournède, 2017. "The capacity of governments to raise taxes," OECD Economics Department Working Papers 1407, OECD Publishing.
    6. Goerke, Laszlo, 2013. "Relative consumption and tax evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 52-65.
    7. Mayshar, Joram & Moav, Omer & Neeman, Zvika, 2011. "Transparency, Appropriability and the Early State," CEPR Discussion Papers 8548, C.E.P.R. Discussion Papers.
    8. Busato; Francesco & Bruno Chiarini & Vincenzo di Maro, 2005. "Directional Congestion and Regime Switching in a Long Memory Model for Electricity Prices," Economics Working Papers 2005-19, Department of Economics and Business Economics, Aarhus University.
    9. Annette Alstadsæter & Wojciech Kopczuk & Kjetil Telle, 2019. "Social networks and tax avoidance: evidence from a well-defined Norwegian tax shelter," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(6), pages 1291-1328, December.
    10. Roberto José Arias, 2004. "Reglas de selección para la fiscalización de Impuestos a las Ventas," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 42(2), pages 29-62, Diciembre.
    11. Compton, Ryan & Nicholls, Christopher C. & Sandler, Daniel & Tedds, Lindsay, 2011. "Quantifying the Personal Income Tax Benefits of Backdating: A Canada - US Comparison," MPRA Paper 39789, University Library of Munich, Germany.
    12. Giammatteo, Michele & Iezzi, Stefano & Zizza, Roberta, 2022. "Pecunia olet. Cash usage and the underground economy," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 107-127.
    13. Benjamin Eden, 2009. "The Role of Government in the Credit Market," Vanderbilt University Department of Economics Working Papers 0907, Vanderbilt University Department of Economics.
    14. Péter Elek & János Köllő, 2019. "Eliciting permanent and transitory undeclared work from matched administrative and survey data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(3), pages 547-576, August.
    15. Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-271, February.
    16. Kolml, Ann-Sofie & Larsen, Birthe, 2010. "The Black Economy and Education," Research Papers in Economics 2010:3, Stockholm University, Department of Economics.
    17. Laszlo Goerke, 2014. "Tax Evasion by Individuals," IAAEU Discussion Papers 201409, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    18. James Alm & James C. Cox & Vjollca Sadiraj, 2020. "Audit State Dependent Taxpayer Compliance: Theory And Evidence From Colombia," Economic Inquiry, Western Economic Association International, vol. 58(2), pages 819-833, April.
    19. Leibfritz, Willi, 2011. "Undeclared economic activity in central and eastern Europe -- how taxes contribute and how countries respond to the problem," Policy Research Working Paper Series 5923, The World Bank.
    20. Laszlo Goerke, 2015. "Income tax buyouts and income tax evasion," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 120-143, February.

    More about this item

    Keywords

    foreign ownership; tax avoidance; effective tax rate; cash-flow ETR; Thailand;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aiy:jnljtr:v:9:y:2023:i:1:p:98-100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalia Starodubets (email available below). General contact details of provider: https://edirc.repec.org/data/seurfru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.