Foreign Capital Participation and Tax Aggressiveness in Brazilian Companies

This study explores the relationship between tax aggressiveness and foreign capital participation in Brazilian companies listed on the BM F BOVESPA from 2010 to 2015, using the concept of tax aggressiveness as a reduction of taxable income through tax management and planning (Chen et al., 2010).Observing that previousstudiesshow a significantrelationship between tax aggressiveness and ownership structures,thisresearch seeksto understand whetherthisrelationship issignificantifthere is foreign capital participation in the company. The sample was composed of Brazilian companies listed on the BM F BOVESPA. Two metrics of tax aggressiveness were used to investigate this relationship: effective tax rate (ETR) and book‐tax difference (BTD). The use of these metrics was inspired in a review on tax research by Hanlon and Heitzman (2010), who concluded that ETR and BTD could capture the reduction oftaxable income through tax planning. The resultsshowed no significant relationship between foreign capital participation and tax aggressiveness, demonstrating that the origin of equity capital is not a factor of tax aggressiveness.