Corporate value added tax avoidance

JS Zhang (First Author), Z Huo (Participant Author), YM Zeng (Participant Author), XJ Tang (Participant Author), OM Rui

Research output: Contribution to journalJournal

4 Citations (Web of Science)


Previous studies of corporate tax avoidance have focused exclusively on corporate income tax, an important tax for US firms in particular. Value added tax (VAT), which is a significant tax in other major economies in the world, is ignored in the literature. This paper examines corporate VAT avoidance behaviour in the context of China, where both corporate income tax and VAT are critical for firms. We develop a measure of corporate VAT avoidance and, using simultaneous equation regression, we find a complementary relationship between corporate income tax avoidance and VAT avoidance. This indicates that traditional studies that limit their focus to income tax may have underestimated the magnitude of firms' tax avoidance. The negative effect of VAT avoidance on firm value supports extant arguments in the literature that the opaqueness caused by tax avoidance increase the agency cost between shareholders and managers.
Original languageEnglish
Pages (from-to)338-362
Number of pages25
JournalAccounting Forum
Issue number4
Publication statusPublished - 2 Oct 2021

Corresponding author email

Project sponsor

National Natural Science Foundation of China (NSFC)
Ministry of Education, China

Project No.



  • Corporate tax avoidance
  • Corporate income tax
  • Endogeneity
  • Value added tax

Indexed by

  • ABDC-B
  • SSCI


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