Foreign investors’ interests and corporate tax avoidance: evidence from an emerging economy
Foreign investment inflows into developing countries has become a cause for concern, as the opportunity for profit shifting across their various operating outlets has made multinational companies tax avoidant in host countries. Thus, this study examines the tax impact of foreign investors’ intere...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English English |
| Published: |
Elsevier
2015
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/42902/1/JCAE_-_Foreign_Investors%27_Interests_and_Corporate_Tax_Avoidance.pdf http://irep.iium.edu.my/42902/4/42902_Foreign%20investors%E2%80%99%20interests%20and%20corporate_SCOPUS.pdf http://irep.iium.edu.my/42902/ http://www.sciencedirect.com/science/journal/18155669 |
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| Summary: | Foreign investment inflows into developing countries has become a cause for concern, as
the opportunity for profit shifting across their various operating outlets has made multinational
companies tax avoidant in host countries. Thus, this study examines the tax impact
of foreign investors’ interests within a host developing economy. The sample data were
extracted from annual reports of the FTSE Bursa Malaysia Top 100 firms for the financial
periods of 2009, 2010 and 2011. Using four similar measures of tax avoidance and three
related measures of foreign investors’ interest, our analysis of the dynamic panel data with
a system GMM estimator shows significant positive relationships between foreign investors’
interests and the measures of corporate tax avoidance among large Malaysian companies.
This result suggests the possibility of multinational companies exploiting their international
scales of operations to avoid taxes in both host and parent countries. Thus, emerging
economies need to consider the residual benefits of foreign direct investment in the presence
of such tax avoidance in their pursuit of economic development. |
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