Global tax enforcement policies have received increased attention since the financial crisis, with much stated focus on curbing perceived harmful tax practices of multinational corporations. Yet there is a dearth of evidence on possible differential effects of home‐country tax enforcement on multinationals. We take a step toward filling this void in the tax policy discussion by examining whether there is a differential relation between changes in home‐country enforcement and the tax avoidance of domestic versus multinational corporations. Using OECD data on 50 countries from 2005 to 2019, we find increases in home‐country enforcement are associated with lower levels of tax avoidance for domestic firms than for multinational corporations. Using a subset of firms from the Bureau van Dijk database, we find that multinationals avoid more tax in foreign countries when home‐country enforcement increases. Results are stronger for multinationals with a higher proportion of subsidiaries in low‐tax countries and when enforcement spending is low. These findings have implications for policy‐makers and highlight the importance of coordinated enforcement efforts across jurisdictions—such as the recently proposed global minimum tax—to successfully curb multinationals' worldwide tax avoidance.

We interview public company tax executives to provide new evidence on how corporate taxpayers experience and navigate the income tax audit process. Interviewees describe being “targeted” by “tax police” and having to “defend” their positions. Thus, we adopt a structural metaphor of tax audits as police investigations and use a framework from the policing literature to explain what influences taxpayers' perceptions of fairness during audits. Perceptions of fairness are important as targets of investigations are more likely to cooperate and accept outcomes when they perceive policing processes as fair. Tax executives aim to obtain fair and consistent treatment by compiling documentation, consulting with peers and external advisors, and educating tax agents. Audits are adversarial, however, and taxpayers also act strategically to secure favorable outcomes and appeal or litigate when they believe outcomes are unfair. Interviewees note variation in the extent to which tax authorities create frameworks that facilitate fair audit processes and whether tax agents implement these frameworks. Our study offers new insights into the tax audit process from corporate taxpayers' perspectives. First, public company taxpayers view tax audits as redundant to financial statement audits of their tax positions. Thus, tax audits may have limited scope to deter tax noncompliance. Second, tax executives are not passive actors; they take deliberate actions to shape audit outcomes. Third, audits are less efficient for everyone when taxpayers perceive them as procedurally unfair. Investments by tax authorities that increase perceptions of fairness may enhance audit efficiency by increasing taxpayers' cooperation and acceptance of outcomes.