Government Ownership and Corporate Tax Evasion: Evidence from China
63 Pages Posted: 2 May 2018 Last revised: 7 Nov 2022
Date Written: March 13, 2022
Abstract
We examine the effect of government ownership, a first-order defining characteristic of publicly listed Chinese firms, on corporate tax evasion. We select China because publicly listed Chinese firms are required to disclose detected corporate tax evasion since 2003. After correcting for tax evasion’s partial observability, we find that state-owned enterprises (SOEs) are more likely to evade taxes, their evasion is less likely to be discovered, and, when it is detected, SOEs also pay lower penalties relative to non-SOEs. Our findings refute the common perception that SOEs are less aggressive in tax avoidance than non-SOEs.
Keywords: Tax Avoidance, Tax Evasion, China, Government Ownership
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