The Effect of Corporate Taxes on Investment and Entrepreneurship

We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on “the same” standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. Corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy. The results are robust to the inclusion of many controls. (JEL E22, F23, G31, H25, H32, L26)

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Taxation in a mixed economy: the case of China

Studies in Economics and Finance ◽

10.1108/sef-08-2015-0183 ◽

2017 ◽

Vol 34 (1) ◽

pp. 49-61 ◽

Cited By ~ 2

Author(s):

Davidson Sinclair ◽

Larry Li

Keyword(s):

Income Tax ◽

Central Government ◽

Corporate Income Tax ◽

Tax Rates ◽

Government Ownership ◽

Effective Tax Rate ◽

Effective Tax Rates ◽

Content Type ◽

Tax Rate ◽

For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

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Beneficial ownership of income as an antiabusive measure in Serbian Tax Law

Zbornik radova Pravnog fakulteta Nis ◽

10.5937/zrpfn0-27818 ◽

2020 ◽

Vol 59 (88) ◽

pp. 217-232

Author(s):

Miloš Vasović

Keyword(s):

Income Tax ◽

Corporate Income Tax ◽

Tax Law ◽

Tax Rates ◽

Double Taxation ◽

Current Function ◽

Tax Rate ◽

Treaty Shopping ◽

Beneficial Ownership ◽

The One

The Serbian Corporate Income Tax Act contains a provision on the beneficial ownership of income (hereinafter: the BO provision), which is one of the conditions for the application of the preferential tax rate on income tax after tax deduction, which is envisaged in Treaties for the avoidance of Double Taxation on income and capital (hereinafter: Double Taxation Treaties/ DTTs). The subject matter of research in this paper is the term "beneficial ownership", which is not defined in the Corportate Income Tax Act. It may ultimately lead to abusing the preferential tax rates from the DTTs in tax planning and "treaty shopping" through the use of conduit companies. Tax experts have different opinions on the legal nature of the BO provision, which is given the function of an anti-abusive measure (on the one hand) and a rule for the attribution of income (on the other hand). The author analyzes the current function of the BO provision envisaged in the Serbian Serbian Corporate Income Tax Act (CITA), and its inadequate application. The author advocates for enacting the BO provision as an anti-abusive measure, and examines the possible application of the BO provision in domestic tax law, with reference to Articles 10, 11, and 12 of the DTTs that Serbia contracted with other states, as well as Articles 10-12 of the OECD Model-Convention on Income and Capital (2017) and Commentaries on these articles. Such an application of the BO provision may preclude "treaty shopping". In final remarks, the author points out why the BO provision should be envisaged as an anti-abusive measure in Serbian tax law.

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THE COMPARISON OF CORPORATE INCOME TAX IN LATVIA AND LITHUANIA

INDIVIDUAL. SOCIETY. STATE. Proceedings of the International Student and Teacher Scientific and Practical Conference ◽

10.17770/iss2017.3048 ◽

2017 ◽

pp. 20

Author(s):

Jūlija Ščeglova ◽

Iveta Mietule

Keyword(s):

Income Tax ◽

The State ◽

Corporate Income Tax ◽

Tax Rates ◽

State Budget ◽

Tax Base ◽

Tax Rate ◽

Common Features ◽

Advance Payment ◽

Tax Payers

Corporate income tax is one of the important taxes that provide revenues to the state budget. Article contains a comparison between Latvian and Lithuanian existing legislation relating to corporate income tax, studied differences between the tax rates, tax base, tax period and taxpayers. Were described differences that are related to the advance payment calculation, as well as created an example that shows how advance payments are calculated in Latvian and Lithuanian companies. As a result, it was found that there are several common features in the Latvian and Lithuanian legislation, with regard to corporate income tax, for example, the tax payers, taxation period, tax rate, the taxable amount. But there are several differences, such as the nuances of rates for non-residents, depending on the type of revenue, advance payment deadlines and other particularities of the calculation of the advance payments. Also differ corporate income tax payment deadlines. It was concluded that making advance payments in Lithuanian enterprises is more profitable, because it was calculated that at the same conditions, the amount of advances in Lithuania is lower than in Latvia.

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Effective Corporate Income Tax Rates: Southern and Northern Economies of the European Union

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v10i1.16273 ◽

2020 ◽

Vol 10 (1) ◽

pp. 117

Author(s):

Dimitris Balios ◽

Nikolaos Eriotis ◽

Stefanos Tantos ◽

Dimitrios Vasiliou

Keyword(s):

European Union ◽

Income Tax ◽

Corporate Income Tax ◽

Tax Rates ◽

The European Union ◽

Tax Rate ◽

Industrial Sectors ◽

Determining Factors ◽

Business Profitability ◽

Alternative Approaches

In the present study, we attempt to investigate the determinants of the effective corporate tax rate of companies of the European Union (EU) discriminating between northern and southern economies. We adopt in our analysis the period after the outbreak of the crisis in the Eurozone up today including some years before 2009 in the assessed period. Our empirical investigation is based on three alternative approaches to effective income tax rate based on accounting information. We investigate the determinants of ECITR assessing two sub-samples of firms from all the aforementioned industrial sectors for 16 member countries of Europe. The first sub-sample consists of firms from 12 member countries of "North" European Union and the second sub-sample consists of firms from 4 member countries of "South" European Union. The analysis covers the period 2004-2016. Estimation results point out that the effective corporate income tax rate is variously affected by firm-specific determining factors for both northern and southern economies. The relation between ECITR and determining factors is ascertained to be less significant (sensitive) during the pre-crisis period in comparison with the respective empirical findings after the outburst of the economic crisis in the European Union. Empirical findings indicate that effective corporate income tax rate is more vulnerable to financial leverage for southern economies in comparison to the northern economies signaling financing structure differences between the two EU-country groups. Finally, there is evidence that there is an indisputable and positive coexistence between business profitability and tax burden.

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The Influence of Corporate Income Taxes on Investment Location: Evidence from Corporate Headquarters Relocations

Management Science ◽

10.1287/mnsc.2020.3906 ◽

2021 ◽

Author(s):

Travis Chow ◽

Sterling Huang ◽

Kenneth J. Klassen ◽

Jeffrey Ng

Keyword(s):

Income Tax ◽

Strong Support ◽

The State ◽

Economic Consequences ◽

Corporate Income Tax ◽

Tax Rates ◽

Tax Rate ◽

Percentage Point Increase ◽

Point Increase ◽

State Income

This study examines the effects of jurisdictions’ corporate taxes and other policies on firms’ headquarters (HQ) location decisions. Using changes in state corporate income tax rates across time and states as the setting, we find that a one-percentage-point increase in the HQ state corporate income tax rate increases the likelihood of firms relocating their HQ out of the state by 16.8%, and an equivalent decrease in the HQ state rate decreases the likelihood of HQ relocations by 9.1%. Exploiting the unique tax policy features within the state apportionment system lends strong support to the interpretation that taxation drives this effect. Our analyses also demonstrate that state income tax features affect the destination of the HQ move. We contribute to the literature on corporate decision making by showing how state income taxation affects a real corporate decision that has significant economic consequences for the company and the state. This paper was accepted by Brian Bushee, accounting.

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The Estate Tax Drag on Family Businesses

Family Business Review ◽

10.1111/j.1741-6248.1996.00233.x ◽

1996 ◽

Vol 9 (3) ◽

pp. 233-252 ◽

Cited By ~ 3

Author(s):

J.D. Foster ◽

Patrick Fleenor

Keyword(s):

Simulation Model ◽

Entrepreneurial Activity ◽

Wealth Accumulation ◽

Tax Rates ◽

Corporate Tax ◽

Estate Tax ◽

Tax Rate ◽

Estate Taxes ◽

The Individual ◽

Disincentive Effect

This essay considers estate taxes and their effect upon entrepreneurial activity and family business. After a brief history of estate taxes, estate compositions and tax burdens are addressed. Finally, a simulation model is used to quantify the disincentive effect of estate taxation upon wealth accumulation. The simulation model suggests that estate taxes have the same disincentive effect as would a 67% individual tax rate or a 67.85% corporate tax rate. Thus, it would be necessary to roughly double the individual and corporate tax rates to reduce bequests to the level under the current estate tax regime.

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Growth-Enhancing Corporate Tax Reform in Belgium

Nordic Tax Journal ◽

10.1515/ntaxj-2018-0004 ◽

2018 ◽

Vol 2018 (1) ◽

pp. 1-17 ◽

Cited By ~ 1

Author(s):

Ruud De Mooij ◽

Shafik Hebous ◽

Milena Hrdinkova

Keyword(s):

Public Finance ◽

Economic Growth ◽

Income Tax ◽

Tax Reform ◽

Corporate Income Tax ◽

Tax Rates ◽

Corporate Tax ◽

Tax System ◽

Corporate Tax Reform ◽

The Government

Abstract Until 2018, Belgium had a unique corporate income tax system due to its notional interest deduction, also known in public finance literature as the allowance for corporate equity. At the same time, it had one of the highest corporate tax rates in Europe at 34 percent. The latter came under severe pressure to reform and, as of 2018, the government has started to reduce the rate, gradually to reach 25 percent in 2020. The reduction is accompanied by other measures, including a limitation of the notional interest deduction. This paper argues that the lower CIT rate is likely to be conducive to economic growth. Yet, the effects on growth would have been more favorable if the notional interest deduction would have been strengthened, rather than diminished.

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EMPIRICAL ANALYSIS OF EFFECTS OF INCOME TAX ON ECONOMIC GROWTH OF WESTERN BALKAN COUNTRIES

Knowledge International Journal ◽

10.35120/kij2801129s ◽

2018 ◽

Vol 28 (1) ◽

pp. 129-135

Author(s):

Luljeta Sadiku ◽

Merale Fetahi-Vehapi ◽

Murat Sadiku

Keyword(s):

Economic Growth ◽

Income Tax ◽

Negative Impact ◽

Vital Role ◽

Tax Rates ◽

Corporate Tax ◽

Tax Rate ◽

Balkan Countries ◽

Almost All ◽

Sustainable Economic Growth

The existing theoretical literature advocates that tax policy plays a vital role on the economic development, principally policy that include a reduction in the rate of taxation is a dominant incentive of economic growth. In this regard, almost all Western Balkan countries cut the income tax and move to a flat tax rate in order to stimulate the employment and investment which in turn will spur the economic growth. Thus, the purpose of this research paper is to empirically examine how changes of income tax affect the economic growth of Western Balkan countries. For analysing this issue, panel econometric models are employed using yearly data for the time period 2005-2016. The estimation results reveal that the personal income tax has positive and significant impact on growth. While corporate tax has negative impact on growth in almost all models, but the coefficient is statistically insignificant. This implies that the current corporate tax rates couldn’t endow with sustainable economic growth in the sample countries.

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FISCAL CORRECTION OF REPORTING TAX PAYABLE TAXPAYER BASED ON GENERAL RATE OF CORPORATE INCOME TAX IN 2020 (CASE STUDY AT PT. KARMILA UTAMA SENTOSA)

International Journal of Research -GRANTHAALAYAH ◽

10.29121/granthaalayah.v9.i8.2021.4184 ◽

2021 ◽

Vol 9 (8) ◽

pp. 382-394

Author(s):

Suprianto ◽

Sarifudin ◽

Eka Agustiani

Keyword(s):

Income Tax ◽

Corporate Income Tax ◽

Fiscal Year ◽

Case Method ◽

Tax Credit ◽

Tax Rates ◽

Government Regulations ◽

Tax Rate ◽

Directorate General

ABSTRACT This study takes the title "Fiscal Correction of Reporting Tax Payable Taxpayer Based on General Rate of Corporate Income Tax in 2020 (Case Study at PT. Kamilia Utama Sentosa ). The aim is to analyze the fiscal correction and income tax payable in fulfilling the tax obligations of corporate taxpayers based on the 2020 Corporate Income Tax General Rate. This research was conducted at PT. Kamilia Utama Sentosa in Mataram with the application of the case method, namely the case at PT. Kamilia Utama Sentosa related to corporate taxpayer tax obligations referring to government regulations regarding general corporate income tax rates for 2020. Fulfillment of Corporate Taxpayer Obligations PT. Kamilia Utama Sentosa for the 2020 fiscal year, namely the Fulfillment of Corporate Taxpayer Obligations related to the calculation, deposit, and reporting of the Annual SPT has been carried out in accordance with applicable regulations, namely the application of the Corporate Income Tax rate of 22%. The results of the fiscal correction show that there is a time difference in the calculation regarding the recognition of expenses according to the tax law. Positive correction according to fiscal, there is a difference of Rp. 13,674,428, - while the Taxable Income in the Profit/Loss report is Rp. 496,659,611, so that the income tax payable by the Taxable Entrepreneur (KPKP) who gets the facility (50 % x 22 % ) x Income Tax Those who get the facility, namely income tax payable amounting to Rp 34,062,397,- After deducting the total tax credit that has been deposited, the underpaid/overpaid income tax (PPh payable – Tax Credit) is Rp 34,062,397 – 61,917,344 = Rp 27,854. 947,- (overpaid income tax). Overpayment of corporate income tax of PT. Kamilia Utama Sentosa can be requested back or refunded and or calculated in the 2021 tax year or the excess tax is returned to PT. Kamilia Utama Sentosa by submitting an application to the Directorate General of Taxes.

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PENGARUH PERUBAHAN TARIF PAJAK PENGHASILAN BADAN TERHADAP RETURN SAHAM DENGAN LIABILITAS PAJAK TANGGUHAN SEBAGAI VARIABEL INTERVENING PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI (Periode 2008 – 2010)

InFestasi ◽

10.21107/infestasi.v12i1.1804 ◽

2016 ◽

Vol 12 (1) ◽

pp. 98

Author(s):

Galih Rhendra Putra ◽

Heru Tjaraka

Keyword(s):

Stock Returns ◽

Income Tax ◽

Stock Exchange ◽

Corporate Income Tax ◽

Tax Rates ◽

Manufacturing Companies ◽

Tax Rate ◽

Analysis Technique ◽

Deferred Tax Liabilities ◽

Deferred Tax

This research aimed to test whether there is the effect of changes in corporate income tax rate to return stock with deferred tax liabilities as an intervening variable. Changes in corporate income tax rates expected to have an indirect effect on stock returns. Variables used in this research include the change in the corporate tax rate as independent variables, stock returns as dependent variable and deferred tax liabilities as an intervening variable. The population used in this research were all manufacturing companies listing on the Stock Exchange in the period the change in corporate income tax rate is 2008-2010. Data were analyzed using path analysis technique to assess causal relationships between variables that have been set. The results of this research indicate that the phenomenon of corporate income tax rate changes have no significant effect either on the deferred tax liabilities and stock returns, while deferred tax liabilities had a positive effect on stock returns. Results of this research concluded that the deferred tax liabilities can not be a mediator or intervening variable between corporate income tax rate changes and stock returns.

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