Tax Treaty Scrutiny, Proprietary Costs, and Offshore Disclosure in Emerging Markets

Bangkit Dwi Prasetyo; Diana Puspitasari

doi:10.69725/jipi.v2i1.326

Authors

Bangkit Dwi Prasetyo Department of Management, Faculty of Economics and Business, Dian Nuswantoro University, Semarang, Indonesia, 50131
Diana Puspitasari Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Kota Semarang, Indonesia, 50131

DOI:

https://doi.org/10.69725/jipi.v2i1.326

Keywords:

Treaties, Offshore disclosure, Exchange of information, Tax incentives, Voluntary disclosure

Abstract

Purpose – We investigate how tax treaty–related governance mechanisms affect firms' disclosure of offshore activities, considering the different incentives they have to avoid taxes.

Design/methodology/approach – We examine structural relationships using a theory-based survey design and partial least squares structural equation modelling.

Findings – Individuals who are knowledgeable about tax treaties are more likely to disclose offshore information. However, they are less likely to do so if they believe that this will result in information exchange, higher costs, or stricter scrutiny by tax authorities. There is also reason to believe that people are motivated to avoid sharing information, which may exacerbate the negative impact of the perception of information sharing on offshore information disclosure. This suggests that people make strategic decisions about transparency in the face of higher enforcement risk. However, the moderating impact of tax avoidance motives varies depending on the type of enforcement pressure, suggesting that firms at opposite ends of the spectrum respond differently to disclosure.

Originality/value – This study integrates disclosure, tax avoidance, and enforcement theories, revealing how managerial treaty perceptions shape offshore disclosure incentives.

Research Implications – The results suggest that working together on taxes might accidentally stop people from sharing information, especially when companies want to avoid taxes. This means we need to pay more attention to making sure people follow the rules, being open about what we're doing, and how managers behave, if we want to have a better global system.

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Author Biographies

Bangkit Dwi Prasetyo, Department of Management, Faculty of Economics and Business, Dian Nuswantoro University, Semarang, Indonesia, 50131

Bangkit Dwi Prasetyo is an undergraduate student in the Department of Management, Faculty of Economics and Business, Dian Nuswantoro University, Semarang, Indonesia. His academic interests focus on corporate governance, taxation, and financial decision-making in emerging markets. He is particularly interested in examining the interaction between tax regulation, corporate disclosure practices, and managerial behavior. His current research emphasizes empirical approaches to international taxation, offshore disclosure, and the role of governance mechanisms in shaping corporate transparency. Bangkit actively engages in academic writing and research development to support evidence-based managerial and policy-oriented analysis.
Diana Puspitasari, Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Kota Semarang, Indonesia, 50131

Diana Puspitasari, S.E., M.M. is a lecturer in the Department of Management, Faculty of Economics and Business, Universitas Dian Nuswantoro, Indonesia. Her academic expertise includes financial management, macroeconomic policy analysis, and applied econometrics. She has published in nationally and internationally indexed journals and actively supervises research in monetary economics and financial risk management. Her research emphasizes the integration of macroeconomic theory with empirical analysis to support evidence-based policy and managerial decision-making.

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