Tax Avoidance Strategies Post-Base Erosion and Profit Shifting (BEPS) Tax Reforms
Keywords:
Tax avoidance, BEPS tax reforms, multinational corporations, profit shifting, corporate taxationAbstract
This study examined the empirical evidence on tax avoidance strategies following the implementation of the Base Erosion and Profit Shifting (BEPS) Project introduced by the Organisation for Economic Co-operation and Development to address aggressive tax planning by multinational corporations. The main objective of the study was to investigate the effect of BEPS tax reforms on corporate tax avoidance practices. Specifically, the study evaluated the influence of BEPS reforms, firm size, leverage, and profitability on tax avoidance behavior among multinational firms. The study adopted an ex-post facto research design and relied on secondary data obtained from the annual financial statements of selected firms. Correlation and regression techniques were used to analyze the data with the aid of statistical software. The findings revealed that BEPS tax reforms have a significant negative effect on tax avoidance, indicating that the reforms have helped reduce aggressive tax planning and profit-shifting activities. The results also showed that firm size, leverage, and profitability have significant positive relationships with tax avoidance. Based on these findings, it concludes that although BEPS reforms have contributed to reducing corporate tax avoidance, firm-specific characteristics still influence the extent to which corporations engage in tax planning strategies. The study, therefore, recommends stronger tax enforcement, improved transparency in corporate reporting, and continuous international cooperation among tax authorities to effectively curb tax avoidance practices.
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