Drivers of tax avoidance by MNEs in the developing countries under the digital economy: a modified-TISM approach

Kavita Pandey, Surendra S. Yadav and Seema Sharma

Journal of Advances in Management Research, 2023, vol. 20, issue 5, 896-919

Abstract: Purpose - The present research identifies a total of nine factors influencing tax avoidance under the international taxation regime of the developing countries and establishes a hierarchical relationship through modeling of the identified factors using modified-total interpretive structural modeling (M-TISM). Design/methodology/approach - Due to “scale without mass” properties of the digital economy, businesses reduce their physical presence in the countries of economic activities. Aided with digital features, multinational enterprises (MNEs) avoid, abolish, or adopt flexible tax burden in the developing nations through by-passing the permanent establishment condition for company taxes or the income characterization prerequisite for royalty taxation. The present research endeavors to identify the drivers of tax avoidance in the developing countries, especially exacerbated due to digital technologies (economy). In addition, the authors also examine the hierarchical relation between the extracted drivers of tax avoidance. Findings - This research presents a considerable driving force of elements like historical foundation of tax-treaties, dominance of the developed countries, influence of trade bodies in policy matters and finally information and communications technologies (ICTs). Originality/value - Identified elements drive the actors like professional enablers, tax havens, international organizations, and intangible assets in the form of intellectual properties (IPs) which act upon tax arbitrage situations both under the domestic and treaty regulations, finally culminating into profit shifting, tax manipulations or avoidance.

Keywords: Digital economy; Developing countries; Multinational enterprises; Tax arbitrage; Tax avoidance; Total interpretive structural modeling (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:jamrpp:jamr-02-2023-0025

DOI: 10.1108/JAMR-02-2023-0025

Access Statistics for this article

Journal of Advances in Management Research is currently edited by Prof Ravi Shankar and Prof Surendra Yadav

More articles in Journal of Advances in Management Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().