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Tax-driven wealth chains: A multiple case study of tax avoidance in the finnish mining sector

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  • Finér, Lauri
  • Ylönen, Matti

Abstract

This paper contributes to recent discussions of corporate tax avoidance and global wealth chains. Drawing on multiple case studies, we outline the key strategies adopted by Finnish mining companies as they seek to lower their tax burden. After screening the accounts of the companies mining metallic ores in Finland, we provide an in-depth analysis of the tax avoidance arrangements at three of these mines. The mines were operated by two Canadian enterprises that utilized seven different tax avoidance arrangements. The multiple case study approach adopted in this paper is helpful in developing both quantitative and qualitative tax avoidance research, since our findings highlight major deficiencies of datasets commonly used in the dominant quantitative tax avoidance research. Our qualitative approach helps tackle some of the limitations imposed on tax researchers as a result of the considerable secrecy surrounding tax matters. In particular, we argue that the existing tax avoidance research has focused too much on statutory corporate income tax rates even though today, tax minimization relies mostly on specific tax incentives and other loopholes in tax laws. We argue that the arrangements we describe mirror a wider phenomenon where multinational enterprises exert societal power commonly associated with sovereign states. Crossing the disciplinary boundaries of accounting, political economy and tax law, we also contribute to the emerging research agenda on global wealth chains. We call for more attention to the intersections between accounting and tax law for understanding how enterprises can separate their value chains from the intra-firm flows of wealth.

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  • Finér, Lauri & Ylönen, Matti, 2017. "Tax-driven wealth chains: A multiple case study of tax avoidance in the finnish mining sector," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 48(C), pages 53-81.
  • Handle: RePEc:eee:crpeac:v:48:y:2017:i:c:p:53-81
    DOI: 10.1016/j.cpa.2017.01.002
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    More about this item

    Keywords

    Tax avoidance; Mining industry; Global wealth chains; Multinational companies;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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