A Study On The Relationship Of Interregional Tax Competition And Tax Avoidance Of Enterprises

The construction of China's Pilot Free Trade Zone(PFTZ)is a regional strategic aimed at deepening the Reform of Economic System and expanding the degree of Opening-up,and bringing remarkable economic growth and social development to the region.The implementation of tax policies to promote investment,trade and talent introduction gives PFTZ autonomy in tax collection and management,which means widening the gap between PFTZ and non-beneficiary areas.Free trade zones can enhance their attraction to enterprises through preferential tax policies and autonomy of tax collection and administration.For enterprises,the goal of maximizing profits determines the motivation of minimizing tax payment.Chinese companies generally reflect greater pressure on tax burden.Existing studies have focused on the internal and external factors affecting tax avoidance,but few studies have examined the factors affecting corporate tax avoidance from the perspective of inter-regional tax competition.Starting from the tax competition caused by regional policies,the mechanism of influencing the tax avoidance behavior of micro-enterprises has both theoretical value and micro practical value.In order to cope with these problems,the adjacent regions need to strengthen tax competition to ensure that the factors of production are not lost.However,the local governments in China have limited tax power and can only compete in tax collection and management.Therefore,tax competition leads to a decrease in tax collection and management,and then brings out a decrease in the probability of being punished for tax avoidance,and leads to an increase in tax avoidance motivation,resulting in an increase in the degree of tax avoidance.Based on asymmetric tax competition theory,official political promotion championship theory and principal-agent theory,paper uses prefecture-level cities in PFTZ and neighbor cities,and construct the macro-micro cross-data sets of A-share listed companies in 2005-2017.The paper then uses the combination of spatial metrology and ordinary least squares method to carry out empirical research.The main conclusions are as follows:(1)The construction of PFTZ enhances the tax competition between PFTZ and its neighboring regions;(2)Under the background of PFTZ construction,the tax competition between regions enhances the degree of tax avoidance of enterprises,and the impact mechanism the above relationship is decreasing the tax collection and management of regions;(3)Compared with the lower tax-bearing enterprises in the region,the high-tax-bearing enterprises have a higher degree of tax avoidance;(4)Compared with geographically dispersed enterprises,geographically centralized enterprises have a higher degree of tax avoidance under the influence of inter-regional tax competition.The study broadens the scope of tax avoidance research,alleviates the interference of endogenous problems by using exogenous PFTZ construction,and depicts the causal relationship panorama of "National PFTZ Strategy-Regional Tax Competition-Enterprise Tax Avoidance".The study provides suggestions for enterprises to increase tax avoidance costs,the government to reduce taxes and fees on a larger scale,tax authorities to regulate tax revenue and improve tax collection,and also regional coordinated development.