초록

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Abstract ▼ AI-Helper

The purpose of this paper is to conduct an empirical test whether the excess of accounting income over taxable income(BTDIF) increases the probability of tax audit. Specifically, we examine whether the higher BTDIF produces the higher probability of tax audit, and therefore pays the higher additio...

The purpose of this paper is to conduct an empirical test whether the excess of accounting income over taxable income(BTDIF) increases the probability of tax audit. Specifically, we examine whether the higher BTDIF produces the higher probability of tax audit, and therefore pays the higher additional tax. According to the results comparing BTDIF between tax-audited firms and non tax-audited firms, selected as control firms with a similar size within the same industry in the same year over the period 1993-1998, we can’t find evidence that the higher BTDIF causes the higher probability of tax audit and higher additional tax. Actually, the distribution of BTDIF of tax-audited firms appears not to be significantly different from that of non tax-audited firms. This implies that tax-audited firms do not attempt tax avoidance by reducing taxable income in the tax-adjustment process. To summarize, the BTDIF in Korea appears to be independent of tax audit and does not work as a red flag.

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