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公司避稅與金字塔結構
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and (5) personnel training over the five-year time period; the categories listed above
account for the most tax credits issued in Taiwan.
We re-examine our tests by removing high-tech industries (i.e., TEJ industry
classification equals 23) from our sample. Table 8 shows that the number of investment
layers is negatively associated with tax rates for non-high-tech firms. The results suggest
that our results are not driven by companies from a specific industry who are under the
protection from the Statute for Upgrading Industries.
7. Conclusion
We examine whether a firm’s tax avoidance activities are influenced by its
organizational structure (i.e., the number of layers within the corporate pyramid). We
investigate whether organizational complexity, captured by the number of layers,
influences a firm’s tax avoidance level. To address this research question, we employ the
sample of publicly traded companies in Taiwan since all publicly traded companies in
Taiwan are required to disclose information on all of their subsidiaries according to
“
Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports
and Consolidated Financial Statements of Affiliation Enterprises
”, which allows us to
calculate the number of layers based on publicly available affiliation information. We find
that firms with more number of layers engage in more tax avoidance. These results
support the notion that the use of corporate pyramid allows the parent firm to have more
opportunities to take tax avoidance activities without being detected. In addition, we
further document that the increase in the number of layers in corporate pyramids helps
facilitate tax avoidance activities, and thus, the negative association between effective tax
rates and the number of subsidiaries operating in tax havens relative to the total number of
subsidiaries becomes more pronounced as the number of layers in corporate pyramids
increases.
The study contributes to a few streams of literature. First, we contribute to the tax
literature by providing evidence that corporate pyramids may explain the channel by
which companies conduct their tax avoidance. Shackelford and Shevlin (2001) call for the
research on the effect of insider control and other organizational factors such as ownership
structure on tax avoidance. While there are various ways to empirically measure
organizational complexity, such as geographic and industry diversification, we identify a
measure, the number of layers, which can serve as organizational complexity as well as