Income Shifting Behavior of Japanese Multinationals
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This study attempts to identify the factors that motivate Japanese listed non-financial multinationals intrafirm trade and their income shifting behavior toward different taxation policies in various countries. In terms of econometric methodology, the two-stage least square estimation technique (2SLS) is employed to establish the relationship between intrafirm sales and its determinants such as tax rate and interest rate using a pooled sample of 460 foreign affiliates of 251 Japanese publicly listed manufacturing multinationals for the period 2000 to 2009. The empirical results confirm that intrafirm trade within a group of companies will intensify when affiliated companies are located in low corporate tax rates jurisdictions while parent companies are in higher tax zones, and it will decline when affiliated companies are located in a high corporate tax rate zones. Furthermore larger firms are inclined toward income shifting rather than small firms. The empirical results reveal that if the local cost of borrowing in order to finance new investment and assets is high, the affiliate firm will avoid transferring their surplus fund. Regarding ownership, the wholly owned Japanese affiliates participate in low income shifting compared to partially owned affiliates.
Abstract
This study attempts to identify the factors that motivate Japanese listed non-financial multinationals intrafirm trade and their income shifting behavior toward different taxation policies in various countries. In terms of econometric methodology, the two-stage least square estimation technique (2SLS) is employed to establish the relationship between intrafirm sales and its determinants such as tax rate and interest rate using a pooled sample of 460 foreign affiliates of 251 Japanese publicly listed manufacturing multinationals for the period 2000 to 2009. The empirical results confirm that intrafirm trade within a group of companies will intensify when affiliated companies are located in low corporate tax rates jurisdictions while parent companies are in higher tax zones, and it will decline when affiliated companies are located in a high corporate tax rate zones. Furthermore larger firms are inclined toward income shifting rather than small firms. The empirical results reveal that if the local cost of borrowing in order to finance new investment and assets is high, the affiliate firm will avoid transferring their surplus fund. Regarding ownership, the wholly owned Japanese affiliates participate in low income shifting compared to partially owned affiliates.
참고문헌 (36)
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