Persistence of the Positive Impact of Legislative Strategies to Constrain Multinational Corporate Tax Avoidance in Light of the ‘PwC Tax Scandal’

ABSTRACT This study examines the impact of Australia's multinational anti‐avoidance legislation and diverted profits tax on restricting corporate tax avoidance (CTA) among foreign significant global entities (SGEs) operating in Australia, in light of the Price Waterhouse Coopers (PwC) tax scandal. Of particular concern is the persistence of the impact of these legislative strategies to significantly restrict CTA behaviour of foreign SGEs in Australia. Our findings suggest that Australia's unilateral strategies to restrict CTA appear to be relatively short‐lived. The findings indicate that such legislative tax policies function more as restrictions rather than as deterrents, potentially serving only to increase the costs associated with CTA. Consequently, the incentives associated with CTA in Australia are likely to remain in place.