E-Commerce and International Tax Planning

Carla Carnaghan ( University of Lethbridge) and Kenneth J. Klassen (University of Georgia) posted the paper "E-Commerce and International Tax Planning"

Here is the Abstract:

This paper investigates whether the increased flexibility afforded by e-commerce has allowed firms to increase their tax planning activities. We specifically address whether multinational firms that make greater use of e-commerce have greater sensitivity to tax incentives relative to firms making less use of e-commerce. Using proxies for e-commerce activity, we find that the relation between exports and tax incentives is increasing in the e-commerce measures.

Alternative tests of foreign tax expense and country-level trade activity corroborate the main test. This research is an important first step in understanding the larger impact of e-commerce on international tax planning behavior.

Available at SSRN: http://ssrn.com/abstract=557124 or DOI: 10.2139/ssrn.557124