Abdullah Almutairi, Baban Eulaiwi, Robert Evans, Grantley Taylor
{"title":"Tax Haven Use and Related-Party Transactions: Evidence from Australia","authors":"Abdullah Almutairi, Baban Eulaiwi, Robert Evans, Grantley Taylor","doi":"10.1111/auar.12413","DOIUrl":null,"url":null,"abstract":"<p>Related-party transactions (RPTs) and transfer pricing techniques are typically used by multinational enterprises to reduce their tax obligations by shifting the income to zero or to low-tax countries. These techniques have thrived and have emerged as a significant concern for tax authorities. This study investigates the effect of tax haven utilisation on related-party sales pricing in a sample of Australian listed firms. We find that tax haven use is positively and significantly associated with related-party sales pricing. Moreover, we identify a positive and significant interaction between tax havens and earnings management with related-party sales pricing. Ownership concentration and its interaction effect with tax havens are significant predictors of the increased use of related-party sales pricing. Overall, the empirical findings demonstrate that earnings management, a high level of ownership concentration and the use of tax havens are substantial factors that enable firms to obtain tax benefits via the use of RPTs.</p>","PeriodicalId":51552,"journal":{"name":"Australian Accounting Review","volume":"33 4","pages":"352-374"},"PeriodicalIF":3.1000,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/auar.12413","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Australian Accounting Review","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/auar.12413","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Related-party transactions (RPTs) and transfer pricing techniques are typically used by multinational enterprises to reduce their tax obligations by shifting the income to zero or to low-tax countries. These techniques have thrived and have emerged as a significant concern for tax authorities. This study investigates the effect of tax haven utilisation on related-party sales pricing in a sample of Australian listed firms. We find that tax haven use is positively and significantly associated with related-party sales pricing. Moreover, we identify a positive and significant interaction between tax havens and earnings management with related-party sales pricing. Ownership concentration and its interaction effect with tax havens are significant predictors of the increased use of related-party sales pricing. Overall, the empirical findings demonstrate that earnings management, a high level of ownership concentration and the use of tax havens are substantial factors that enable firms to obtain tax benefits via the use of RPTs.