The role of anti-tax avoidance in tax base flow and international tax competition

Jiaxing Zheng, Sida Bai, Cheng Gu, Bihui Huang and Mengxu Xiong

Pacific-Basin Finance Journal, 2024, vol. 84, issue C

Abstract: By constructing the profit shifting model for MNCs, this study uses transfer pricing rules and bilateral tax conventions to examine the impact of anti-avoidance system on a country's corporate income tax base. Based on the balanced panel data of 50 countries from 2000 to 2013, we use the SYS-GMM method and find that the transfer pricing rules of neighboring countries significantly reduces the tax base of a country, while the impact of bilateral tax agreements on a country's tax base is slight. During the sample period, the management level of international anti-avoidance is improved, while the degree of tax competition among countries becomes more intense. Moreover, we show that anti-avoidance measures can reduce the phenomenon of tax avoidance for intangible assets.

Keywords: Anti-avoidance; Spillover effect; Base flow; International tax competition (search for similar items in EconPapers)
JEL-codes: H2 H25 H26 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x2400060x

DOI: 10.1016/j.pacfin.2024.102309

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