Can Regional Tax Incentives Improve Corporate Performance?——Research on Tax Avoidance Based on Intra-Group Profit Transfer
This paper studies income shifting and tax avoidance behaviors of listed companies located in national and provincial development zones from 2008 to 2018.It investigates how these parent companies leverage preferential policies of development zones where their subsidiaries are newly classified,along with the negative economic effects.This article finds that parent companies transfer income taxes to these subsidiaries in development zones through related transactions,enabling them to indirectly benefit from the tax preferential policies.As for firm performance,after reducing tax li-abilities,companies tend to allocate funds towards excessive executive compensations,larger dividend payouts and share repur-chases,rather than increasing investments or enhancing their overall value.In addition,the paper finds that the negative effects of development zones would be mitigated by improving political environment and strengthening tax information supervision ca-pacity.Specifically,this article finds that in areas where the relationship between the government and the market is less inter-twined,the role of legal environment is better-built,the intermediary organizations are more developed,the financial concentra-tion is less pronounced,and the"tax depression"effect on stimulating corporate investment more obvious.This article gives three suggestions.Firstly,efforts should be made to rectify local tax haven and highlight the positive role of development zones.Secondly,the anti-tax avoidance system should be established and enhanced,with greater ability to su-pervise tax-related information.Thirdly,there is a need to optimize the modern tax system,which serves as a crucial foundation for enhancing the effectiveness of fiscal policy.
Goporate GroupTax AvoidanceProfit TransferDevelopment Zones
NETL
NSTL
万方数据
