European Journal of Accounting, Finance and Investment

Distinctive Attributes Of Multinational Corporations And Their Tax Avoidance Behaviour In Nigeria

Fred Vincent Fred-Horsfall (PhD)

Lecturer, Department of Accountancy, Faculty of Management Sciences, University of Port Harcourt

George Tamunotonye Peters (PhD)

Senior Lecturer, Department of Accountancy, Faculty of Management Sciences, Rivers State University

Keywords: Tax Avoidance Behaviour, Multinational Corporations

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Abstract

Against the backdrop of concerns commonly expressed about MNCs' proclivity to manipulate taxation to their advantage, this study was undertaken to determine which of their distinctive attributes between global presence and profit-shifting ability more remotely contribute to it. Accordingly, a logistic regression was performed to ascertain the effects of global presence and profit-shifting ability on the likelihood of MNCs’ tax avoidance behaviour. The model explained 81.1% (Nagelkerke R²) of the variance in tax avoidance behaviour of MNCs in Nigeria and correctly classified 88.9% of cases. It was found that global presence and profit-shifting ability of MNCs respectively exert significant influence on tax avoidance behaviour of MNCs in Nigeria. It was also found that capital intensity does not significantly moderate how global presence and profit-shifting ability influence tax avoidance behaviour of MNCs in Nigeria. Given the sensitivity of tax avoidance behaviour of MNCs to degree of their global presence/outreach and profit-shifting ability across international boundaries, we recommend that the subsisting Income Tax (Transfer Pricing) Regulations 2018 in Nigeria should be repealed and replaced with another one which should take cognizance of MNCs’ attributes