이월세액공제 기업의 소득 이전 행위에 대한 실증연구 = Income Shifting Behavior of Firms with Carried Forward Tax Credits

다국어 초록 (Multilingual Abstract)

This study investigates (1) whether firms with carried forward tax credit shift income upward (2) whether they shift income outside using intercompany transaction to share their performance with related parties using 1,972 listed companies from 2003 to 2010. According to the Restriction Of Special Taxation Act Section 144, firms levied Alternative Minimum Tax(hereafter ``AMT``) following the Section 132 are limited in entirely using tax exemption or credit thereby bearing carried forward tax credit which can be used during next 5 years. Carried forward tax credits can be regarded as tax cushion because they can save explicit tax cost corresponding to increased taxable income. Prior literatures indicate that firms levied AMT are likely to decrease their financial income in order to reduce taxable income. This implies the possibility that firms levied AMT in prior year can shift their financial performance to the next fiscal year. Futhermore, it is to possible to interpret that firms with tax cushion by the AMT are more affordable to share the performance because carried forward tax credit may provide increased disposable income. For this, related literature finds that FDIs under the Foreign Investment Promotion Act and Section 121 of the Restriction Of Special Taxation Act have more intercompany transaction to transfer their earnings. Moreover, their behavior was accelerated as they have more tax benefits. This finding indicate that firms with carried forward tax credit can shift their income to related parties To enhance external validity for these empirical issues to domestic firms, we established following two alternative hypotheses using the indicator of income shifting (1) whether firms with carried forward tax credit shift their income upward (2) whether firms with carried forward tax credit increase intercompany transaction to shift their earnings. Main findings are as follows: First, we find that firms with carried forward tax credit increased their earning by enlarging the sales margin. Second, we also find that firms with carried forward tax credit are more likely to shift their income to related parties. These findings are collaborated in large firms and we observe that firms with carried forward tax credit shift their income by manipulating sales price rather than purchase price. Our study contributes to the literature by empirically examining the effectiveness of tax exemption policies by enhancing data to domestic firms with tax benefit. Findings of the present study should also provide policy makers with insights on how to mix targeted tax incentives with overall tax relief measures.