Tax provision by international subsidiaries of Indian extractive industry multinationals: Do environmental pollution and corruption matter?

Khanindra Ch Das, Mantu Kumar Mahalik and Perry Sadorsky

Resources Policy, 2023, vol. 80, issue C

Abstract: Outward foreign direct investment in the extractive industry increases the availability of metals and minerals that run the economic engine in the home country. It is unclear, however, whether tax provision by subsidiaries of emerging multinationals in extractive sectors respond to environmental pollution and corruption in the host country. In this paper we examine the tax provision in the host countries by subsidiaries of private sector based emerging multinationals in the extractive resources (metals and mining) sector. The analysis is carried out through a two-step system dynamic panel data GMM estimation, using data from 86 international subsidiaries of 15 Indian multinationals in 31 host countries for the period 2010 to 2019. Tax provisioning is found to be lesser in countries with higher environmental pollution. Tax provision is higher in countries with greater prevalence of corruption. However, the interactive effect suggests that in the presence of environmental pollution the subsidiary tax provisioning is higher in host countries if there is better control of corruption. This indicates that low corruption will offset a decline in tax provision from higher pollution. Furthermore, subsidiaries are found to have lesser tax provisioning when the parent firm has a tax dispute in the home country, implying the role of firm behaviour in shaping tax contribution by subsidiaries. The results are robust to the organization of subsidiaries through offshore financial centres.

Keywords: Tax provision; Extractive industry; International subsidiary; Environmental pollution; Corruption; Dynamic panel (search for similar items in EconPapers)
JEL-codes: F23 H23 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420722006742
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:80:y:2023:i:c:s0301420722006742

DOI: 10.1016/j.resourpol.2022.103231

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().