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Tax Revenue Manipulation by Local Taxation Administrations in China

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  • Yi-Hong Deng
  • Ting Luo

Abstract

This paper investigates the tax revenue manipulation in China by local taxation administrations to achieve a sustainable performance. We document a higher volatility in the effective corporate income tax rates for those companies registering in provinces with more tax sources caused by the manipulation. We also find that companies' ability to pay tax is negatively correlated with the probability of being selected by local taxation administrations for the purpose of tax revenue manipulation. Second, local taxation administrations' relationships with companies and the subsidy allocated to companies have no significant effect on this selection.

Suggested Citation

  • Yi-Hong Deng & Ting Luo, 2011. "Tax Revenue Manipulation by Local Taxation Administrations in China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 18(1), pages 61-75.
    • Handle: RePEc:taf:raaexx:v:18:y:2011:i:1:p:61-75
    DOI: 10.1080/16081625.2011.9720874
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    References listed on IDEAS

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    1. Gupta, Sanjay & Newberry, Kaye, 1997. "Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data," Journal of Accounting and Public Policy, Elsevier, vol. 16(1), pages 1-34.
    2. Zimmerman, Jerold L., 1983. "Taxes and firm size," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 119-149, April.
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