Can Private Enterprises Obtain More Government Subsidies by Reducing Reasonable Tax Avoidance: An Interpretation of Corporate Tax Payment Motivation

WANG Yan; CHEN Hong-ye; WANG De-li

Volume 36 Issue 4

Aug. 2021

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WANG Yan, CHEN Hong-ye, WANG De-li. Can Private Enterprises Obtain More Government Subsidies by Reducing Reasonable Tax Avoidance: An Interpretation of Corporate Tax Payment Motivation[J]. Journal of Guangdong University of Finance & Economics, 2021, 36(4): 50-65.

Citation:

WANG Yan, CHEN Hong-ye, WANG De-li. Can Private Enterprises Obtain More Government Subsidies by Reducing Reasonable Tax Avoidance: An Interpretation of Corporate Tax Payment Motivation[J]. Journal of Guangdong University of Finance & Economics, 2021, 36(4): 50-65.

Citation:

WANG Yan, CHEN Hong-ye, WANG De-li. Can Private Enterprises Obtain More Government Subsidies by Reducing Reasonable Tax Avoidance: An Interpretation of Corporate Tax Payment Motivation[J]. Journal of Guangdong University of Finance & Economics, 2021, 36(4): 50-65.

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Can Private Enterprises Obtain More Government Subsidies by Reducing Reasonable Tax Avoidance: An Interpretation of Corporate Tax Payment Motivation

1.
School of Accounting, Guangdong University of Foreign Studies, Guangzhou 510006, China
2.
School of Management, Jinan University, Guangzhou 510632, China

Received Date: 2021-03-11
Available Online: 2021-08-04
Publish Date: 2021-07-18

Abstract

Abstract

China is currently in a critical period of economic transformation. Due to the limitation of ownership, compared with state-owned enterprises, private-owned enterprises are more motivated to undertake rent-seeking activities to obtain more resources. Using a dataset of listed private-owned enterprises in China, this study investigates the relationship between their corporate tax avoidance and subsequent acquisition of government subsidies. The findings indicate that in the context of decreasing provincial economic performance, private-owned enterprises will treat paying more corporate tax as a means of rent-seeking, to help them obtain more government subsidies in the future. Further research shows that mixed ownership reform in private-owned enterprises can curb rent-seeking and promote healthy development of privately owned enterprises. This study reveals the reason that private-owned enterprises in China still choose to pay comparatively high corporate tax even if under the background of economic downturn. Furthermore, as to the promotion of high-quality development of privately owned enterprises, it helps readers better understand the importance of mixed ownership reform and provides evidence for promoting the mixed ownership reform in China.
- private enterprise,
- provincial economy,
- corporate tax avoidance,
- government subsidies,
- mixed ownership reform,
- rent-seeking

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References(42)

References

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