Seeking The Characteristics of Tax Management:Evidence from Taiwan

• Main Authors: Munkhjargal Khurelkhuu, 白玫
• Other Authors: LiHua Kao
• Format: Others
• Language: en_US
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/73661504283372252178

碩士 === 中原大學 === 會計研究所 === 99 === Using data of Taiwanese public firms for period between 1998 and 2007, this study extended prior empirical work on inferring tax shelter participation from financial statement information. Unlike in these prior studies (i.e., confidential information of tax shelter cases of firms), I employed three distinct commonly used measures: (i) the estimated long-run cash effective tax rate (LRETR), (ii) the total book-tax difference (BTD), and (iii) the residual book-tax difference (DD_BTD). In addition, the Taiwan government takes Alternative Minimum Tax (AMT) into consideration, starting 2006. Thus, I also examined that difference between the firms’ tax management activities before and after the implementation of AMT. Results indicated that BTD and SIZE are negatively correlated with long-run tax management. For BTD measurements of the tax management proxy, there is negative correlation between tax management activity and leverage. My results also show a positive significant difference between firms before and after the implementation of AMT. This suggests that firms with the implementation of AMT are significantly more tax aggressive than those firms without. In additional analyses, using a very low LRETR, this study developed a measurement which estimated the probability that a firm engages in a tax shelter and found out that the coefficients of BTD, DAP, and SIZE remained with strong positivity and the R&D variable are both positive and significant in the logistic regression. The results of this study show that LRETR is negatively correlated with NOL in the OLS regression, while tax shelter activity has a strong significant positive correlation with NOL in the logistic regression. I also found that tax shelter activity is negatively correlated with LagETR and EqEarn. These results suggest that the opposite correlations work against prediction of the Treasury (1999) of U.S and these results could be caused by the different tax policy and corporate income tax regimes from U.S.