The implications of in-house tax expertise on tax behavior

Sammanfattning: We examine whether companies with in-house tax expertise consisting of auditing, accounting and tax consultancy firms have a tax outcome that is different to similar type of service companies without in-house tax expertise. To investigate this, we use a firm fixed effect regression model on an unbalanced panel data set consisting of private Swedish companies during the time period 2007-2017. To measure tax outcome, we use a measure that is designed to capture the tax planning behavior of private asset-light service firms. We propose and find that the group of auditors, accountants and tax consultants pay less income taxes relative to firms with similar operating and financial characteristics that do not offer tax related services. The findings support previous research that have demonstrated tax experts' ability to avoid taxes, although the research question investigated in this study is to the best of our knowledge unprecedented.