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Corporate investments in tax havens: evidence from India

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Abstract

Little is known about the drivers of corporate investments in tax havens from emerging markets. This paper offers extensive descriptive statistics and regression analysis to illustrate the patterns and motivations for tax haven investments by Indian firms over the 2007–2017 period. We find that the motivations for Indian firms to invest in tax havens are not only driven by the benefits of tax avoidance and secrecy of these jurisdictions, but also to seek strategic advantage and efficiency gains in global markets.

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Notes

  1. See https://www.livemint.com/Politics/QezF00YdFhnQiv4Nb4l0wN/Shell-companies-crackdown-Govt-to-deregister-120-lakh-more.html, accessed on 20th April 2018.

  2. See https://www.dnaindia.com/business/report-vijay-mallya-diverted-rs-4000-crore-to-tax-havens-2182859, accessed on 20th April 2018.

  3. See press release http://pib.nic.in/newsite/PrintRelease.aspx?relid=157712, accessed on 20th April 2018.

  4. See https://indianexpress.com/article/india/india-news-india/tracking-the-cash-trail-how-mossack-fonseca-stonewalled-delhi/, accessed on 20th April 2018.

  5. See https://www.business-standard.com/article/economy-policy/indian-corporates-invested-5-6-bn-abroad-through-mauritius-in-2016-17-117052600151_1.html, accessed on 20th April 2018.

  6. See http://www.oecd.org/countries/monaco/listofunco-operativetaxhavens.htm for a list of uncooperative tax havens.

  7. We are grateful to an anonymous reviewer for this insight.

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Authors and Affiliations

  1. Strategy Area, Indian Institute of Management Tiruchirappalli, Pudukottai Main Road, Chinna Suriyur Village, Tiruchirappalli, Tamil Nadu, 620024, India

    K. V. Mukundhan

  2. Hunter Centre for Entrepreneurship, Strathclyde Business School, University of Strathclyde, Glasgow, G4 0QU, UK

    Sreevas Sahasranamam

  3. School of Business & Administration, State University of New York (SUNY) – Brockport, 115B Hartwell Hall, 350 New Campus Drive, Brockport, NY, 14420, USA

    James J. Cordeiro

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  1. K. V. Mukundhan
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Correspondence to Sreevas Sahasranamam.

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Mukundhan, K.V., Sahasranamam, S. & Cordeiro, J.J. Corporate investments in tax havens: evidence from India. Asian Bus Manage 18, 360–388 (2019). https://doi.org/10.1057/s41291-019-00086-y

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