Fiscal Management Practices and Their Impact on Corporate Groups’ Fiscal Performance

This article analyses the impact of fiscal management practices on the fiscal performance of all the groups of companies whose parent company is listed on the Tunisian Stock Exchange over a period spanning from 2007 to 2011. Our regression results indicate that Tunisian firms use several practices to reduce their tax liabilities. We specifically conclude that the number of intra-group transactions and tax relief are significantly associated with tax avoidance. Transaction cost theory is utilized to identify the relationship between fiscal management practices and fiscal performance. In general, the theory focuses on minimizing transaction costs. It is important to consider transactions between related parties that have different taxation rates offering considerable opportunities of fiscal management practices. So, transfer pricing decisions can involve multiple objectives: the maximization of global profit and the minimization of global taxes