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We investigate two cross‐border profit shifting channels used by foreign multinational enterprises (MNEs) in Australia and assess the effectiveness of the related measures adopted by the Australian Parliament to combat base erosion and profit shifting (BEPS). Overall, we find that Australian subsidiaries of foreign MNEs used tax‐induced intra‐group transfer pricing and, to a lesser extent, interest expense loading to shift profit out of Australia throughout the period from 2007 to 2020. However, we find no evidence indicating that profit shifting out of Australia via the two channels has reduced after the implementation of related BEPS countermeasures in Australia from 2013. [ABSTRACT FROM AUTHOR]

Prior studies suggest that profit shifting by multinational enterprises (MNEs) occurs not only in developed countries but also in developing ones. However, the knowledge of profit shifting in developing countries is very limited, because the findings of most of the prior studies are difficult to interpret due to problems about reliability of data and method used to measure profit shifting (Fuest & Riedel, 2012). This article investigates whether foreign-owned Indonesian companies (FOICs) shift profits out of Indonesia by following an approach introduced by Hines and Rice (1994) (hereafter HRA) with some modifications. HRA has been widely cited in the literature of international tax avoidance. We examine both the accounting profit and taxable income reported by FOICs in their Indonesian tax returns using confidential data supplied by the Indonesian tax authority. After analysing a final sample of over 3,000 observations from 2009 to 2015, we find that on average a one percentage point lower statutory tax rate in the residence country of an FOIC's parent is associated with a reduction of 2.6% and 2.9%, respectively, in the pre-tax accounting profit and taxable income reported by the FOIC in its Indonesian tax return. [ABSTRACT FROM AUTHOR]

This is an empirical study on the cross-border profit shifting engaged in by Australian subsidiaries of foreign multinational enterprises for tax avoidance. The study reveals that in comparison with domestic-owned listed Australian companies, foreignowned Australian companies utilise intra-group transfer pricing and pay high interest rates on intra-group debts to shift profits out of Australia to avoid Australian tax to a greater extent, which are manifested in their lower gross profit margins and operating profit margins, higher interest expenses but similar leverage ratios, as well as lower pre-tax profits and income tax expenses. [ABSTRACT FROM AUTHOR]

This study investigates whether and how the Australian dividend imputation system alleviates corporate tax avoidance by Australian listed companies. Based on a sample of profitable Australian listed companies across the period from 2009 to 2012, this study finds that companies distributing a higher proportion of their after‑tax profits as franked dividends and companies with less foreign ownership engage in less corporate tax avoidance. No significant statistical association between foreign operations and corporate tax avoidance is found. Furthermore, this study finds that when an Australian listed company with partial foreign ownership pays more franked dividends to meet the demands of its Australian shareholders, it tends to engage in less corporate tax avoidance; and when an Australian company has foreign operations, it may shift foreign profits to Australia to enjoy greater benefits from the imputation system. This study contributes to the literature and political debate with regards to corporate tax avoidance by providing empirical evidence on the tax avoidance‑reducing effect of the dividend imputation system. [ABSTRACT FROM AUTHOR]

This study investigates both the explicit and implicit tax burdens of mining firms versus non-mining firms in Australia for the period from 2006 to 2009. Explicit tax burdens are measured by current effective tax rate. Implicit tax burdens are present if firms receiving tax subsidies suffer reductions in pre-tax rate of return. The results show that mining firms have a lower explicit tax burden than non-mining firms after controlling for firm size, capital intensity and foreign operations. Mining firms do not incur offsetting implicit tax on the mining-specific income tax subsidies, but non-mining firms suffer implicit tax on the tax subsidies received. Moreover, mining firms are found to have a significantly higher pre-tax rate of return on equity than non-mining firms because low resource taxes on resources extracted from Australia mean low cost of sales for mining firms. This study depicts a comprehensive picture of the equity dimension of the Australian corporate income tax system, with a focus on the differential tax burdens of mining and non-mining firms. [ABSTRACT FROM AUTHOR]