Ownership Structure and Tax Avoidance of Retail Firms in Vietnam: Moderating Effects of Political Connection, Firm Sustained Losses, and Profitability

Purpose: This study investigates how ownership structure affects the tax avoidance behavior of retail firms and also analyses the moderating roles of political connections, firm sustained losses, and profitability. Design/methodology/approach: This study estimates the relationship using Feasible Generalize Least Squares (FGLS) method and a sample of 32 listed Vietnamese retail firms from 2019 to 2023. Findings: The findings show that higher levels of government and foreign ownership are associated with lower levels of tax avoidance among Vietnamese retail firms. This suggests that firms with significant government or foreign ownership are less likely to engage in tax-minimizing strategies. Additionally, the results indicate that political connections and sustained losses help mitigate the relationship between foreign ownership and tax avoidance, suggesting that foreign-owned firms with these features are more likely to avoid tax. Meanwhile, higher profitability increases the use of aggressive tax-planning strategies among firms with government and foreign ownership. Research limitations/implications: The findings provide important policy implications, particularly regarding strategies based on ownership structure, political connections, and firms’ financial conditions, to minimize aggressive tax planning behaviors. Originality/value: Using political connections, firm sustained losses, and profitability as moderators in the impact of ownership structure and tax avoidance behavior of retail firms become the novelty of this research.