MULTINATIONAL TAX AVOIDANCE AND ANTI-AVOIDANCE ENFORCEMENT: FIRM-LEVEL EVIDENCE FROM DEVELOPING ASEAN COUNTRIES

Athiphat Muthitacharoen and Krislert Samphantharak
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Krislert Samphantharak: School of Global Policy and Strategy, University of California San Diego, California, USA3Puey Ungphakorn Institute for Economic Research (PIER), Bank of Thailand, Thailand

The Singapore Economic Review (SER), 2022, vol. 67, issue 06, 2049-2065

Abstract: We use firm-level data from ASEAN5 to examine the significance of tax-motivated profit shifting by multinational enterprises and to analyze how anti-avoidance measures mitigate the profit shifting. We show that (1) tax-motivated profit shifting is statistically and economically significant, especially for manufacturing firms, (2) auditing and transfer-pricing scrutiny is more effective in reducing profit shifting than documentation requirement alone and (3) tax-motivated profit shifting is prominent for large firms, while anti-tax avoidance measures result in the absence of profit shifting detected from small manufacturing firms. The findings have important implications for developing countries with weak governance but dependent on MNEs.

Keywords: Profit shifting; tax avoidance; auditing; transfer pricing; multinational enterprise (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 K34 M42 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Multinational Tax Avoidance and Anti-Avoidance Enforcement: Firm-level Evidence from Developing ASEAN Countries (2019)
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DOI: 10.1142/S021759082050040X

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