Government-enterprise Collusion And Tax Aggressiveness

Corporate tax avoidance exists in most countries in the world.Good tax avoidance methods can reserve more resources for enterprises while complying with government policies and regulations.However,aggressive tax avoidance not only exposes companies to huge tax risks,but also erodes national fiscal revenues and affects the allocation of social resources.Therefore,taxation radicalization has become an issue of concern in the academic and practical circles.There are many factors that affect corporate tax avoidance,and the institutional environment is one of the emerging research objects.The academic circles define the degree of tax avoidance as tax radicality.However,the current research on tax radicality has some problems.First,the current tax radicality measurement indicators are not feasible and not applicable to all research topics.Second,the impact of factors Research pays more attention to factors related to corporate internal governance,and few scholars study the radical impact of the macro-institutional environment on corporate taxation.Existing research shows that the institutional environment is also an important factor affecting corporate decision-making.Therefore,tax decision-making,as an important part of corporate decision-making,will inevitably be affected by changes in the macro environment.Based on this,this article starts from the perspective of the macro-institutional environment,and uses the the merger of national and local tax bureau(2018)as a natural experiment to deeply study the relationship between government-enterprise collusion and corporate taxation.In 1994,the tax-sharing system reform not only divided the taxation powers between the various levels of government in China from the income perspective,but also established two sets of tax collection and management agencies,the National Taxation Bureau and the Local Taxation Bureau,to divide taxation powers from the perspective of collection and management.The separation of national and local taxes gives local governments great discretion in tax collection and management,making it one of the important means for local taxation competition.According to the existing literature,local tax bureaus are more likely to participate in collusion between the government and enterprises than the State Taxation Bureau.Therefore,the taxation progress of companies that pay taxes at the local taxation bureau will be higher.The local taxation bureau could be more likely to "hide tax." to complete the government’s corresponding target tasks.However,the influence and intervention of local governments on tax collection and management will gradually be weakened with the implementation of a new round of tax reform-the merger of national and local tax bureau.This article expects that the merger of national and local tax bureau will reduce the tax aggressiveness of enterprises and optimize the taxation behavior of enterprises.However,depending on the nature,size,and financing constraints of the enterprise,the impact will be different.This article uses 4145 listed companies in Shanghai and Shenzhen from 2014 to 2019 as a research sample,combined with the resumes of tax bureau directors at the provincial county levels,and empirically test the relevant hypotheses about the impact of the merger of state and local taxe bureau on corporate taxation through the use of difference-in-difference method.The study found that:(1)the merger of national and local tax bureau has a significant impact on the tax aggressiveness of enterprises;(2)companies that pay income tax at different tax bureaus are affected differently by the change of directors after the merger;(3)Financing constraints are an important factor affecting companies’ aggressive tax avoidance,companies with high financing constraints have a higher degree of tax avoidance efforts;(4)Enterprises of different sizes are affected differently by the merger.Compared with small and micro enterprises,large-scale enterprises have higher tax incentives.From an academic point of view,this article uses corporate microdata to study the impact of government-enterprise collusion on tax radicalization to a certain extent,enriching the relevant research results,and including government-enterprise collusion in the research scope extends the external influence of corporate tax radicality.The scope of research has certain theoretical significance.In addition,the research conclusions of this article have certain practical significance for tax system reform and tax collection and management,the following suggestions are put forward:(1)Enhance the independence of tax collection and administration agencies and reduce the possibility of collusion between government and enterprises;(2)Solve the problems of difficult and expensive financing for enterprises;(3)Promote tax administration according to law and refine tax management methods.