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Open AccessArticle

Sustainable Tax Behavior of MNEs: Effect of International Tax Law Reform

Department of Business Administration, Korea University, Anam-ro 145, Seoul 02841, Korea
Sustainability 2020, 12(18), 7738; https://doi.org/10.3390/su12187738
Received: 10 August 2020 / Revised: 16 September 2020 / Accepted: 16 September 2020 / Published: 18 September 2020
(This article belongs to the Special Issue Taxation and Sustainability)
As tax is related to the sustainable growth of societies around the world, international tax avoidance by multinational enterprises (MNEs) has gained public attention. The Organization for Economic Co-operation and Development (OECD) introduced the Base Erosion and Profit Shifting (BEPS) Action Plan to promote sustainable tax behavior of MNEs. To guide policymakers and regulators in curving MNEs’ tax schemes utilizing market imperfection, this paper empirically assesses whether the international law reform regarding information disclosures on global operation achieves the intended result of lowering MNEs’ tax avoidance. In addition, the conditional effect of family ownership and intangible asset intensity is addressed to find the factors that strengthen the tax avoidance level of MNEs. This study employs propensity score matching and difference-in-differences method to analyze the changes in international tax liabilities of Korean MNEs in response to BEPS Action Plan 13. The empirical results show that the sustainable tax behavior of MNEs increased when international tax law demanded that they reveal critical information on global allocation of income, economic activity, and taxes paid among countries. Furthermore, the results show that there was a higher increase in the international tax liabilities of MNEs with higher intangible asset intensity. The results suggest to policymakers that the private information disclosure of MNEs’ global operation and sharing such information is essential in tackling MNEs’ BEPS activities, and intangible assets are indeed an important source of tax avoidance. View Full-Text
Keywords: corporate sustainability; tax avoidance; international tax; base erosion and profit shifting; tax collection; natural experiment corporate sustainability; tax avoidance; international tax; base erosion and profit shifting; tax collection; natural experiment
MDPI and ACS Style

Cho, H. Sustainable Tax Behavior of MNEs: Effect of International Tax Law Reform. Sustainability 2020, 12, 7738. https://doi.org/10.3390/su12187738

AMA Style

Cho H. Sustainable Tax Behavior of MNEs: Effect of International Tax Law Reform. Sustainability. 2020; 12(18):7738. https://doi.org/10.3390/su12187738

Chicago/Turabian Style

Cho, Hyejin. 2020. "Sustainable Tax Behavior of MNEs: Effect of International Tax Law Reform" Sustainability 12, no. 18: 7738. https://doi.org/10.3390/su12187738

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