Pasi Syrja
Researcher, Lappeenranta University of Technology, Finland.
Kaisu Puumalainen
Professor, Lappeenranta University of Technology, Finland.
Helena Sjogren
Researcher, Lappeenranta University of Technology, Finland.Tax Planning Practices in Small Limited Companies
- Finnish Evidence
The main objective in this research paper is to examine tax planning
in the small business context. The theoretical background of our
research is in earlier empirical accounting research and contingency
based accounting research in the small business context. The data for
the study were collected through a mail survey. Financial information
about the companies was collected from the Voitto+ database. The
initial population consisted of small limited companies with a turnover
between 1 and 10 million euros. Although we used firms ́ financial
information, anonymity was implemented, because data has been
analyzed and reported in a format that will not permit identification of
individual respondents of their businesses. The final responses were
received from 216 companies, yielding a response rate of 21.3%. The
empirical data were analyzed with quantitative methods.
The aim of this study is to model and describe tax planning in the
small business context and include tax planning as a part of financial
management in small companies. This study also aims to investigate
which determinants explain different tax planning strategies of small
companies. The preliminary results of principal component analysis
indicate that small limited companies in Finland have four different
orientations of tax planning. With cluster analysis we were also able to
group firms to the four internal homogenous groups. These tax
planning groups were named as follows: outsourcers, tax minimizers,
tax neutrals and the knowledgeable. The first group (outsourcers) was
the largest. It included 57% of the companies. The research findings
suggested also that interest groups of financial management had a
significant role in the tax planning of small companies.
In addition to the scientific contribution of our study, the results
also have implications for owner managers of small firms, accounting
companies and policy makers.