Determinants of Corporate Actual Cash Taxes Paid: A New Insight
Keywords:
Tax planning; Tax avoidance; Taxation; Actual cash taxes paidAbstract
This paper examines the null hypotheses that revenues, profitability, intangible assets, percentage of foreign shareholdings, external auditors, tax haven status and firm size do not associate with corporate actual cash taxes paid. The main results of pooled OLS multivariate suggest that revenue, intangible assets, and percentage of foreign shareholdings are directly and significantly associated with corporate actual cash taxes paid. In particular, revenues, intangible assets, and percentage of foreign shareholdings are found to increase corporate actual cash taxes paid, thereby leading to conservative tax planning schemes that reduce tax avoidance. The result also suggests that Big-4 accountancy firms, tax haven status and firm size are negatively and significantly associated with corporate actual cash taxes paid. It is recommended that the 1) Federal Inland Revenue Service should monitor the revenues and intangible assets of companies through companies’ annual fillings, 2) relevant agencies of government should encourage foreign equity participation in Nigerian companies, and 3) more non-Big-4 accounting firms should be empowered to audit companies’ financial statements.
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24. Mocanu, M. C., Sergiu-Bogdan, C. and Răileanu, V. (2021). Determinants of tax avoidance: Evidence on profit tax-paying companies in Romania. Economic Research (January 8), pp. 2-21. https://doi.org/10.1080/1331677X.2020.1860794
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framework. Review of Accounting and Finance, 3 (1), pp. 5-92.
29. Tijjani, B. and Zachariah, P. (2020). Ownership structure and tax planning of listed firms:
Evidence from Nigeria. Journal of Accounting and Taxation, 12 (3), pp. 99-107.
30. Watts, R. L. and Zimmerman, J. L. (1990). Positive accounting theory: A ten year perspective. The Accounting Review, 65 (1), pp. 131-156.
31. Zimmerman, J. L. (1983). Taxes and firm size. Journal of Accounting and Economics, 5, pp. 19-149. https://doi.org/10.1016/0165-4101(83)90008-3
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2. Annuar, H. A., Salihu, I. A. and Sheikh Obid, S. N. (2014). Corporate ownership, governance and tax avoidance: an interactive effects. Procedia-Social and Behavioural Sciences, 164, pp. 150-160.
3. Asien, E. N. (2021). Firm-level characteristics as determinants of tax havens and tax haven share: Nigerian evidence. African Journal of Accounting, Economics, Finance and Banking Research, 14 (14), pp. 27-50.
4. Asien, E. N. (2020). The influence of foreignness in engaging audit firms: An analysis under beps regime. African Journal of Accounting, Economics, Finance and Banking Research, 13 (13), pp. 29-45.
5. Asien, E. N. (2012). It is not “earnings management” if it is not earnings management: An
epistemological dialectic. Journal of Theoretical Accounting Research, 8 (1), pp. 73-84.
6. Ball, R. (2009). Market and political regulatory perspectives on the recent accounting scandals. Journal of Accounting Research, 47 (2), pp. 1-47.
7. Bernard, J. and Weiner, R. (1990). Multinational corporations, transfer prices, and taxes:
evidence from the U.S. petroleum industry. NBR.org. Www.nber.org/chapters/c7207.
8. Chen, S., Chen, X., Chen, Q. and Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics, 95 (1), pp. 41-61.
9. Cohen, J., Cohen, P., West, S. G. and Aiken, L. S. (2003). Applied multiple regression
correlation analysis for the behavioural sciences, (3rd ed.), Lawrence Ealbaum Associates, New Jersey.
10. Dowds, J. (1995). The contemporaneous movement between cash flow and accrual-based
accounting numbers: The New Zealand evidence. Unpublished doctoral thesis, Massey University, New Zealand.
11. Dyreng, S., Hanlon, M. and Maydew, E. L. (2008). Long run corporate tax avoidance. The Accounting Review, 83, pp. 61-82.
12. Eichfelder, S. and Hechtner, F. (2018). Tax compliance costs: Cost burden and cost reliability. Public Finance Review, 46 (5), pp. 764-792.
13. Elemes, A., Blaylock, B. and Spence, C. (2021). Tax-motivated profit shifting in big 4
networks: Evidence from Europe. Accounting, Organisations and Society. Forthcoming, 1-18.
14. Foster, B. J. and Ward, T. J. (2007). The incremental usefulness of income tax allocations in predicting one-year-ahead future cash flows. The Journal of Applied Business Research, 23 (4), pp. 37-44.
15. Garcia-Bernardo, J., Jansky, P. and Tørsløv, T. (2019). Multinational corporations’ effective tax rates: Evidence from Orbis. IES Working papers 20/2020. IES FSV. Charles University, Prague: 2-36. Downloaded from http://ies.fsv.cuni.cz. Accessed on 14 August 2021.
16. Ghodbane, W., Sangdal, D. and Abdennebi, H. (2021). The use of tax havens by MNEs in business clusters: A cross-country and firm-level analysis. European Journal of Business and Management Research, 16 (4), pp. 176-187.
17. Grubert, H. and Slemrod, J. (1998). The effect of taxes on investment and income shifting to Puerto Rico. Review of Economics and Statistics, 80 (3), pp. 365-373.
18. Hair, J. F., Black, W. C., Babin, B. J. and Anderson, R. E. (2009). Multivariate Data Analysis, (7th ed.), Prentice Hall, New Jersey.
19. Hines, J. R. (2010). Treasure Islands. Journal of Economic Perspectives, 24 (4): 103-126.
20. Janský, P. and Palanský, M. (2019). Estimating the scale of profit shifting and tax revenue losses related to foreign direct investment. International Tax and Public Finance, 26 (5), pp.1048-1103.
21. Jones, C., Temouria, Y. and Cobham, A. (2018). Tax haven networks and the role of the big 4 accountancy firms. Journal of World Business, 53, pp. 177-193.
22. Lennox, C., Lisowsky, P. and Pittman, J. (2013). Tax aggressiveness and accounting fraud. Journal of Accounting Research, 51 (4), pp. 1-40.
23. Lisowsky, P. (2010). Seeking shelter: Empirically modeling tax shelters using financial statement information. The Accounting Review, 85 (5), pp. 1693-1720.
24. Mocanu, M. C., Sergiu-Bogdan, C. and Răileanu, V. (2021). Determinants of tax avoidance: Evidence on profit tax-paying companies in Romania. Economic Research (January 8), pp. 2-21. https://doi.org/10.1080/1331677X.2020.1860794
25. Römgens, I. and Steinweg, T. (2016). Research Methodology: Calculating the effective tax rates of large Dutch companies and identifying tax avoidance, SOMO, Amsterdam.
26. Sikka, P. and Hampton, M. P. (2005). The role of accountancy firms in tax avoidance: Some evidence and issues, Working Paper, University of Essex, UK.
27. Slemrod, J. and Wilson, J. D. (2009). Tax competition with parasitic tax havens. Journal of Public Economics, 93, pp. 1261-1270.
28. Stolowy, H. (2004). Earnings manipulation: A literature review and proposed conceptual
framework. Review of Accounting and Finance, 3 (1), pp. 5-92.
29. Tijjani, B. and Zachariah, P. (2020). Ownership structure and tax planning of listed firms:
Evidence from Nigeria. Journal of Accounting and Taxation, 12 (3), pp. 99-107.
30. Watts, R. L. and Zimmerman, J. L. (1990). Positive accounting theory: A ten year perspective. The Accounting Review, 65 (1), pp. 131-156.
31. Zimmerman, J. L. (1983). Taxes and firm size. Journal of Accounting and Economics, 5, pp. 19-149. https://doi.org/10.1016/0165-4101(83)90008-3
32. https:www.gsk.com.media. Accessed on 22 January 2022.
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Published
2022-01-31
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Asien, E. N. (2022). Determinants of Corporate Actual Cash Taxes Paid: A New Insight: Array. The Journal of Accounting and Management, 12(2). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/1566
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