Financial distress and corporate income tax avoidance of firms in Vietnam

Le Thi Hong Minh, Huynh Thi Cam Ha, Nguyen Thi Uyen Uyen, Pham Duong Phuong Thao
Received: 22/05/2017   Revised: 12/08/2017   Accepted: 20/08/2017   Mã số: G30 . G32 . G33 . H25 . H26 . K34.
Abstract: This paper examines the impact of companies' financial distress forecasts on avoiding corporate income tax (CIT) through income adjustment and postponement of tax payments, the degree of CIT avoidance in the context before and after the global financial crisis in 2008-2009. Through the data of Vietnamese companies (2006-2014) and the GLS estimation methodology, the results of the study show that companies have increased tax avoidance when predicted to have financial distress. This study also found that after the global financial crisis 2008-2009, companies are predicted to reduce the CIT avoidance compared to the pre-crisis period. In addition, the size of firms' operations, the length of time in which firms listed on the stock exchange, are viewed by companies as advantages in avoiding CIT.
Keywords: financial distress, corporate income tax, global financial crisis.
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