IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Taxable income differences between foreign and domestic controlled corporations in Norway

  • John Christian Langli
  • Shahrokh Saudagaran
Registered author(s):

    Studies mainly in the United States and United Kingdom have documented that foreign controlled corporations (FCCs) report significantly lower taxable income compared to domestic controlled corporations (DCCs). This taxable income differential has been partly attributed to income shifting by multinational corporations. Using a sample of 78,879 firm-year observations from 1993 to 1996, we find similar systematic differences for firms in the manufacturing, retail and wholesale sectors in Norway. The taxable income to sales ratio is approximately 2.6 percentage points lower for FCCs compared to DCCs after controlling for start-up costs, size, industry affiliation, leverage and capital intensity. The results are statistically significant in all years and independent of whether taxable income is measured as a fraction of sales, total assets or book value of equity. Previous research has indicated that income shifting is more prevalent among large firms. This study provides evidence on small and medium-sized firms operating in Norway. With the exception of really small corporations in the manufacturing industry (e.g. with sales less than 6.7 million NOK or US$1 million), we find that the negative taxable income differential exists independent of the size of the corporations.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.tandfonline.com/doi/abs/10.1080/0963818042000237115
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Taylor & Francis Journals in its journal European Accounting Review.

    Volume (Year): 13 (2004)
    Issue (Month): 4 ()
    Pages: 713-741

    as
    in new window

    Handle: RePEc:taf:euract:v:13:y:2004:i:4:p:713-741
    Contact details of provider: Web page: http://www.tandfonline.com/REAR20

    Order Information: Web: http://www.tandfonline.com/pricing/journal/REAR20

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Harris, D. & Morck, R. & Slemrod, J., 1991. "Income Shifting in U.S. Multinational Corporations," Working Papers 287, Research Seminar in International Economics, University of Michigan.
    2. James R. Hines, Jr. & Eric M. Rice, 1990. "Fiscal Paradise: Foreign Tax Havens and American Business," NBER Working Papers 3477, National Bureau of Economic Research, Inc.
    3. Harry Grubert & Timothy Goodspeed & Deborah L. Swenson, 1993. "Explaining the Low Taxable Income of Foreign-Controlled Companies in the United States," NBER Chapters, in: Studies in International Taxation, pages 237-276 National Bureau of Economic Research, Inc.
    4. Goodspeed, T-J & White, A-D, 1996. "International taxation," Papers 96-11, Wellesley College - Department of Economics.
    5. Shackelford, Douglas A. & Shevlin, Terry, 2001. "Empirical tax research in accounting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 321-387, September.
    6. Alberto Giovannini & R. Glenn Hubbard & Joel Slemrod, 1993. "Studies in International Taxation," NBER Books, National Bureau of Economic Research, Inc, number giov93-1, October.
    7. Steven Globerman & Daniel Shapiro, 2003. "Governance infrastructure and US foreign direct investment," Journal of International Business Studies, Palgrave Macmillan, vol. 34(1), pages 19-39, January.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:13:y:2004:i:4:p:713-741. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.