Tax avoidance opportunity for multinational enterprises: effects of digitalized tax administration in China

IF 5.4 2区经济学 Q1 BUSINESS, FINANCE

Journal of International Financial Markets Institutions & Money Pub Date : 2025-05-19 DOI:10.1016/j.intfin.2025.102177

Yilan Chen , Shaohai Lei

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Abstract

This study investigates the impact of digitalized tax administration (DTA) on multinational enterprises’ (MNEs’) tax avoidance, with a specific focus on outward foreign direct investment (OFDI) in tax havens. Using a quasi-natural experiment based on the implementation of Golden Tax Project III (GTP III) in China, we find that home country DTA significantly reduces the difference between nominal and effective tax rates for MNEs by 1.2%. This reduction is primarily driven by a contraction in OFDI breadth in tax havens, which restrains MNEs’ tax avoidance. We demonstrate an asymmetric effect wherein DTA does not significantly influence domestic firms’ tax avoidance, which is attributed to their ability to facilitate cross-regional investment. We also explore the various responses to cross-border tax avoidance approaches employed by MNEs to mitigate the adverse effects of DTA on corporate tax avoidance. Overall, our findings highlight the critical role of home country DTA in managing MNEs’ tax avoidance, particularly in the context of developing countries.

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跨国企业的避税机会：数字化税务管理在中国的影响

本研究探讨了数字化税务管理（DTA）对跨国企业（MNEs）避税的影响，特别关注避税天堂的对外直接投资（OFDI）。利用基于中国实施黄金税收项目III （GTP III）的准自然实验，我们发现母国DTA显著减少了跨国公司名义和有效税率之间的差异1.2%。这种减少主要是由于避税天堂的对外直接投资广度收缩，这抑制了跨国公司的避税行为。我们证明了一种不对称效应，其中DTA对国内企业的避税没有显著影响，这归因于它们促进跨区域投资的能力。我们还探讨了跨国公司为减轻DTA对公司避税的不利影响而采用的各种跨境避税方法。总体而言，我们的研究结果强调了母国DTA在管理跨国公司避税方面的关键作用，特别是在发展中国家。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of International Financial Markets Institutions & Money Multiple-

CiteScore

6.60

自引率

10.00%

发文量

142

期刊介绍： International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.