Distribution of the Tax Burden across Companies in Vietnam: The Issue of Corporate Tax Avoidance

TRAN, K. T. (2023). Distribution of the Tax Burden across Companies in Vietnam: The Issue of Corporate Tax Avoidance. , 21(6), 83-89, https://doi.org/10.15722/jds.21.06.202306.83

copy

Abstract

Purpose: This paper considers the issue of corporate tax avoidance (CTA) in the distribution of the tax burden across companies in Vietnam because the high level of CTA leads to unfairness in taxation. In particular, we aim for discussing the way to measure the extent of CTA and explore the determinants of CTA that reflect the features of high-tax risk-taking companies. Research design, data and methodology: The study investigates factors influencing the CTA behavior of legal entities listed on the Vietnam stock market between 2012 and 2018 to fill the empirical research vacuum in the country. we employ the dynamic GMM estimate method. Interestingly, CTA is considered through three approaches, including two effective-tax-rate-based methods and especially accrual earnings Results: The results highlight tax - accounting book disparities have significant effects on CTA. In addition, firm size, net asset value, debt leverage, and tax—accounting books are related to CTA. Conclusions: Tax avoidance is shown to have a positive correlation with financial distress in this case. The higher a company's capital adequacy ratio, the fewer tax avoidance opportunities it has. The paper draws some recommendations to deal with tax avoidance that improves the fairness in the distribution of the tax burden among corporations.

keywords: Tax Avoidance, Tax Allocation, Corporate Tax, Vietnam, Fairness

Reference

Chen, K.-P., & Chu, C. C. (2005). Internal control versus external manipulation: A model of corporate income tax evasion. rand Journal of Economics, 36(1), 151-164.

Chen, X., Hu, N., Wang, X., & Tang, X. (2014). Tax avoidance and firm value: evidence from China. Nankai Business Review International, 5(1), 25-42.

Crocker, K. J., & Slemrod, J. (2005). Corporate tax evasion with agency costs. Journal of Public Economics, 89(9-10), 1593- 1610.

Dang, V. C., & Tran, X. H. (2021). The impact of financial distress on tax avoidance: An empirical analysis of the Vietnamese listed companies. Cogent Business & Management, 8(1), 1953678.

Desai, M., & Dharmapala, D. (2006). Corporate social responsibility and taxation: The missing link. Leading Perspectives, 4(57), 4-5.

Desai, M. A., & Dharmapala, D. (2009). Corporate tax avoidance and firm value. The review of Economics and Statistics, 91(3), 537-546.

Desai, M. A., Dyck, A., & Zingales, L. (2007). Theft and taxes. Journal of financial economics, 84(3), 591-623.

Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long‐run corporate tax avoidance. The Accounting Review, 83(1), 61- 82.

Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2019). When does tax avoidance result in tax uncertainty? The Accounting Review, 94(2), 179-203.

10.

Ha, N. M., Trang, T. T. P., & Vuong, P. M. (2021). The Impact on Corporate Financial Leverage of the Relationship Between Tax Avoidance and Institutional Ownership: A Study of Listed Firms in Vietnam. Montenegrin Journal of Economics, 17(4), 65-73.

11.

Ha, N. T. T., & Quyen, P. G. (2017). The relationship between state ownership and tax avoidance level: empirical evidence from Vietnamese firms. Journal of Asian Business Strategy, 7(1), 1-12.

12.

Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of accounting and Economics, 50(2-3), 127-178.

13.

Higgins, D., Omer, T. C., & Phillips, J. D. (2015). The influence of a firm's business strategy on its tax aggressiveness. Contemporary Accounting Research, 32(2), 674-702.

14.

Jones, S. M. (2015). Principles of taxation for business and investment planning. McGraw-Hill Education, New York.

15.

Khuong, N. V., Liem, N. T., Thu, P. A., & Khanh, T. H. T. (2020). Does corporate tax avoidance explain firm performance? Evidence from an emerging economy. Cogent Business & Management, 7(1), 1780101.

16.

Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of accounting and Economics, 39(1), 163-197.

17.

Kovermann, J., & Velte, P. (2019). The impact of corporate governance on corporate tax avoidance—A literature review. Journal of International Accounting, Auditing and Taxation, 36, 100270.

18.

Lisowsky, P. (2010). Seeking shelter: Empirically modeling tax shelters using financial statement information. The Accounting Review, 85(5), 1693-1720.

19.

Phillips, J., Pincus, M., & Rego, S. O. (2003). Earnings management: New evidence based on deferred tax expense. The Accounting Review, 78(2), 491-521.

20.

Rego, S. O. (2003). Tax‐avoidance activities of US multinational corporations. Contemporary Accounting Research, 20(4), 805-833.

21.

Richardson, G., Taylor, G., & Lanis, R. (2013). The impact of board of director oversight characteristics on corporate tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 32(3), 68-88.

22.

Riedel, N. (2018). Quantifying international tax avoidance: A review of the academic literature. Review of Economics, 69(2), 169-181.

23.

Salihu, I. A., Obid, S. N. S., & Annuar, H. A. (2013). Measures of corporate tax avoidance: Empirical evidence from an emerging economy. International Journal of Business and Society, 14(3), 412.

24.

Shackelford, D. A., & Shevlin, T. (2001). Empirical tax research in accounting. Journal of accounting and Economics, 31(1-3), 321-387.

25.

Tandean, V. A., & Winnie, W. (2016). The effect of good corporate governance on tax avoidance: An empirical study on manufacturing companies listed in IDX period 2010-2013. Asian Journal of Accounting Research, 1(1), 28-38.

26.

Tran, T. K., Truong, M. T., Bui, K. T., Duong, P. D., Huynh, M. V., & Nguyen, T. T. H. (2023). Firm Risk and Tax Avoidance in Vietnam: Do Good Board Characteristics Interfere Effectively?. Risks, 11(2), 39.

27.

Wang, F., Xu, S., Sun, J., & Cullinan, C. P. (2020). Corporate tax avoidance: A literature review and research agenda. Journal of Economic Surveys, 34(4), 793-811.

바로가기메뉴

Article Contents

Vol.21 No.6

Distribution of the Tax Burden across Companies in Vietnam: The Issue of Corporate Tax Avoidance

Abstract

Reference

The Journal of Distribution Science