To Go or Not to Go? A Response to Tax Cooperation: Evidence from Chinese Multinational Firms

This study examines how the Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM) affects tax-motivated outward foreign direct investment (OFDI) by Chinese multinational enterprises. Using a firm—year—country panel and a DID framework complemented by a DDD specification, we find that BRITACOM significantly reduces OFDI to low-tax jurisdictions. Mechanism analysis indicates that enhanced cross-border information transparency and enforcement coordination increase the detectability of noncompliance, thereby discouraging aggressive tax planning. The effect is stronger among non-state-owned enterprises, firms with greater foreign exposure, and those facing higher tax burdens. These findings highlight the role of regional tax cooperation in curbing cross-border tax avoidance.