Corrupt tax bureau commissioners and corporate tax avoidance

Jian Chu (), Yaowen Shan () and Gary Gang Tian ()
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Jian Chu: Nanjing University
Yaowen Shan: University of Technology Sydney
Gary Gang Tian: Macquarie University

Review of Accounting Studies, 2025, vol. 30, issue 2, No 21, 1873-1915

Abstract: Abstract This study documents that Chinese non-state-owned enterprises have effective tax rates that are 1% lower during the tenure of corrupt regional tax bureau commissioners (i.e., regional tax bureau chiefs). The reduction in the effective tax rate persists even after controlling for political connections of firms, general local corruption, and a variety of other determinants of tax avoidance. Further analysis shows that corrupt tax commissioners induce bribery activities and exacerbate tax avoidance, and firms in a region overseen by a corrupt tax commissioner are more likely to engage in tax haven operations and tax evasion activities as tax aggressive strategies. However, the influence of corrupt tax commissioners is moderated by a stronger regional legal system and a better information environment. Overall, our results highlight the significant impact of individual tax administrators on corporate tax avoidance behavior.

Keywords: Tax avoidance; Tax commissioners; Corruption; Corporate bribery (search for similar items in EconPapers)
JEL-codes: D73 H26 M48 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-024-09862-4

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