기업의 지리적 입지와 조세회피

This study investigates the association between corporate geographic location and tax avoidance. The Internal Revenue Service annually publishes the corporate tax audit rate of each local tax office through the National Statistical Yearbook. These disclosure data are likely to be used as an important basis for management 's estimation of expected costs of tax avoidance. When local tax authorities in their local jurisdictions show a high corporate tax audit rate, management will assess the expected cost of tax avoidance high since the tax audit likelihood increases. Thus, we expect that firms located in areas where the tax audit rate of the local tax office is high will have a low level of tax avoidance. Meanwhile, among the six local tax offices, the Seoul Regional Tax Office has the highest rate of corporate tax audit. In addition, companies located in Seoul have limitations on the means of tax exemption. In order to promote the local distribution of companies and population, the tax law excludes companies in the metropolitan area from various tax exemptions. As a result, companies in Seoul are expected to have a lower tax avoidance level than companies in other regions. To examine these arguments, we used 7,840 firm-year data listed on KOSDAQ and KOSPI from 2006 to 2014. Our main findings are as follows. First, we corporate audit tax rate is negatively associated with corporate tax avoidance. Second, the firms in Seoul lower tax avoidance levels than firms in other regions. This study suggests policy implications on the importance of balanced tax revenue management effort by considering the relation between physical location of the company and tax avoidance, which have not been covered in the previous study.