Tax Revenue Manipulation by Local Taxation Administrations in China

Yi-Hong Deng and Ting Luo

Asia-Pacific Journal of Accounting & Economics, 2011, vol. 18, issue 1, 61-75

Abstract: This paper investigates the tax revenue manipulation in China by local taxation administrations to achieve a sustainable performance. We document a higher volatility in the effective corporate income tax rates for those companies registering in provinces with more tax sources caused by the manipulation. We also find that companies' ability to pay tax is negatively correlated with the probability of being selected by local taxation administrations for the purpose of tax revenue manipulation. Second, local taxation administrations' relationships with companies and the subsidy allocated to companies have no significant effect on this selection.

Date: 2011
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DOI: 10.1080/16081625.2011.9720874

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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