Offshore Activities and Corporate Tax Avoidance
Copyright policy )Offshore Activities and Corporate Tax Avoidance
We investigate the relation between tax avoidance and offshore activities using a new text-based measure for offshore activities based on Hoberg and Moon (2017, 2019). Our evidence shows that, although providing cross-border tax-avoidance opportunities, offshore activities reduce the marginal benefits of tax avoidance by introducing incremental foreign-market risk exposure. We find that the intensity of offshore sales of outputs is positively associated with the cash effective tax rate. The effect is stronger when the offshore sales rely on overseas production rather than domestic production, when the offshore sales are located in countries with higher economic uncertainty, when the firm has a lower ability to pass on shocks, and when the firm has less flexibility in adjusting tax strategies.
- University of Toronto Canada
- Hong Kong University of Science and Technology Hong Kong
- Wuhan University China (People's Republic of)
- Hong Kong University of Science and Technology China (People's Republic of)
- The Hong Kong University of Science and Technology (Guangzhou) China (People's Republic of)
Mul�na�onal firms Offshore Activities Offshore activities, 330, Offshore ac�vi�es, M41, passing on shocks, H26, Uncertainty, Tax uncertainty, multinational firms JEL Classification: G18, Tax avoidance, Multinational firms, tax avoidance, flexibility, Offshore activities, [SHS.GESTION]Humanities and Social Sciences/Business administration, tax uncertainty, Passing on shocks, Flexibility, uncertainty, [SHS.GESTION] Humanities and Social Sciences/Business administration, Offshore ac�vi�es Tax avoidance Uncertainty Flexibility Passing on shocks Tax uncertainty Mul�na�onal firms Offshore Activities Offshore activities tax avoidance uncertainty flexibility passing on shocks tax uncertainty multinational firms JEL Classification: G18 H26 M41
Mul�na�onal firms Offshore Activities Offshore activities, 330, Offshore ac�vi�es, M41, passing on shocks, H26, Uncertainty, Tax uncertainty, multinational firms JEL Classification: G18, Tax avoidance, Multinational firms, tax avoidance, flexibility, Offshore activities, [SHS.GESTION]Humanities and Social Sciences/Business administration, tax uncertainty, Passing on shocks, Flexibility, uncertainty, [SHS.GESTION] Humanities and Social Sciences/Business administration, Offshore ac�vi�es Tax avoidance Uncertainty Flexibility Passing on shocks Tax uncertainty Mul�na�onal firms Offshore Activities Offshore activities tax avoidance uncertainty flexibility passing on shocks tax uncertainty multinational firms JEL Classification: G18 H26 M41
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