E-Commerce and International Tax Planning

42 Pages Posted: 21 Jun 2004

See all articles by Kenneth J. Klassen

Kenneth J. Klassen

University of Waterloo - School of Accounting and Finance

Carla Carnaghan

University of Lethbridge - Faculty of Management

Date Written: June 2004

Abstract

This paper investigates whether the increased flexibility afforded by e-commerce has allowed firms to increase their tax planning activities. We specifically address whether multinational firms that make greater use of e-commerce have greater sensitivity to tax incentives relative to firms making less use of e-commerce. Using proxies for e-commerce activity, we find that the relation between exports and tax incentives is increasing in the e-commerce measures. Alternative tests of foreign tax expense and country-level trade activity corroborate the main test. This research is an important first step in understanding the larger impact of e-commerce on international tax planning behavior.

Keywords: International Tax Planning, Electronic Commerce, Foreign Trade

JEL Classification: H25, O33, F23

Suggested Citation

Klassen, Kenneth and Carnaghan, Carla, E-Commerce and International Tax Planning (June 2004). Available at SSRN: https://ssrn.com/abstract=557124 or http://dx.doi.org/10.2139/ssrn.557124

Kenneth Klassen (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x38550 (Phone)
519-888-7562 (Fax)

Carla Carnaghan

University of Lethbridge - Faculty of Management ( email )

4401 University Drive
Lethbridge, Alberta TIK 3M4
Canada
403 329-2351 (Phone)

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