The Association among Transfer-Pricing, Tax Avoidance, and Tax Burden in Taiwan

• Main Authors: Wei-Chieh Chen, 陳瑋杰
• Other Authors: Der-Fen Hunag
• Format: Others
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/ubpej2

碩士 === 國立東華大學 === 會計與財務碩士學位學程 === 102 === Tax avoidance activities have become a national issue relevant to tax justice. Transfer- pricing transactions is a strategy for tax avoidance through tax havens. This paper examines the association among transfer pricing transactions, tax avoidance, and tax burden in Taiwan. We also examine the effect of tax haven on the above association. Following prior studies, permanent book-tax differences and cash effective rate are used as proxies for tax avoidance and tax burden, respectively. We estimate non-arm’s length transactions of listed companies using a model developed by Chen and Tsai (2010). Empirical results show that a significant and positive association between the degree of non-arm’s length transactions and permanent book-tax differences, and a significant and negative association between non-arm’s length transactions and tax burden. In addition, empirical results show that the association between transfer pricing and tax burden for companies with tax havens is stronger than those without tax havens.