The Effect of High Ownership Concentration on Tax-Motivated Income Shifting : Evidence from North Africa Multinational Groups

Abstract This paper focuses on multinational corporate groups that resort to income shifting motivated by tax evasion, measuring their association with high ownership concentration. In order to test our hypothesis, our sample is composed of parent companies located in north africa as well as subsidiaries with a lower tax rate than the parent company. The model is based on natural logarithm of pre-tax profit. The results show that parent companies with a high concentration of ownership transfer income for tax avoidance purposes. The result is that governments are reducing their statutory tax rates to encourage investors to focus on high concentration companies in order to increase economic growth. This study shows that, depending on their characteristics, entrepriques can practise tax avoidance strategies, with the emphasis on high levels of ownership concentration