Tax avoidance and state ownership — The case of Sweden

Axel Hilling; Frederik Lundtofte; Niklas Sandell; Amanda Sonnerfeldt; Anders Vilhelmsson

doi:10.1016/j.econlet.2021.110063

Tax avoidance and state ownership — The case of Sweden

Axel Hilling, Frederik Lundtofte, Niklas Sandell, Amanda Sonnerfeldt, Anders Vilhelmsson^*

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › Research › peer-review

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Abstract

We propose a simple theoretical model for how a company with both private and state shareholders decides on its optimal tax policy. The model predicts that even in the absence of state shareholding, a company will not always pick a tax policy that minimizes taxes. Conversely, majority state ownership will generally not result in zero tax avoidance. Using panel regressions on the entire population of state-owned as well as publicly listed Swedish companies from 2000–2019, we find that a one standard deviation increase in state ownership increases corporate tax payments by around 14%.

Original language	English
Article number	110063
Journal	Economics Letters
Volume	208
ISSN	0165-1765
DOIs	https://doi.org/10.1016/j.econlet.2021.110063
Publication status	Published - Nov 2021

Bibliographical note

Publisher Copyright:
© 2021 The Author(s)

Keywords

Ownership structure
State ownership
Tax avoidance

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10.1016/j.econlet.2021.110063

1-s2.0-S0165176521003402-mainFinal published version, 2.78 MBLicence: CC BY 4.0

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AU - Hilling, Axel

AU - Lundtofte, Frederik

AU - Sandell, Niklas

AU - Sonnerfeldt, Amanda

AU - Vilhelmsson, Anders

PY - 2021/11

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N2 - We propose a simple theoretical model for how a company with both private and state shareholders decides on its optimal tax policy. The model predicts that even in the absence of state shareholding, a company will not always pick a tax policy that minimizes taxes. Conversely, majority state ownership will generally not result in zero tax avoidance. Using panel regressions on the entire population of state-owned as well as publicly listed Swedish companies from 2000–2019, we find that a one standard deviation increase in state ownership increases corporate tax payments by around 14%.

AB - We propose a simple theoretical model for how a company with both private and state shareholders decides on its optimal tax policy. The model predicts that even in the absence of state shareholding, a company will not always pick a tax policy that minimizes taxes. Conversely, majority state ownership will generally not result in zero tax avoidance. Using panel regressions on the entire population of state-owned as well as publicly listed Swedish companies from 2000–2019, we find that a one standard deviation increase in state ownership increases corporate tax payments by around 14%.

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ER -

Tax avoidance and state ownership — The case of Sweden

Abstract

Bibliographical note

Keywords

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