scholarly journals The Impact of Corporate Income Tax on Capital Structure: Evidence from Serbian Food Industry

2021 ◽  
Author(s):  
Teodora Tica
Keyword(s):  
Capital Structure ◽  
Income Tax ◽  
Food Industry ◽  
Research Question ◽  
Corporate Income Tax ◽  
Financial Reports ◽  
The Republic ◽  
Tax Savings ◽  
Additional Support ◽  
The Impact

Research Question: The aim of this paper is to present the effect of corporate income tax on capital structure in the food industry of the Republic of Serbia. Motivation: Based on the empirical results of Moradi & Paulet (2018) and Kuc & Kalicanin (2021), the author's aim of the research conducted in this paper is to analyse the impact of corporate income tax on the capital structure in the Republic of Serbia as a developing country with an underdeveloped capital market and to support the results of this sporadically researched area of corporate finance in the Republic of Serbia. Idea: The author believes that by determining the optimal capital structure, it could be possible to reduce the burden of corporate income tax. Given that the food industry is one of the most significant and profitable industries in the Republic of Serbia, the results of this theoretical and empirical research would be of a great benefit to the local Tax Authority and to large taxpayers. Data: The research was conducted on a sample of 250 most active companies that operated within the food industry of the Republic of Serbia in the period from 2017 to 2019. The source of data for the purposes of this research are the official financial reports of companies registered with the Serbian Business Registers Agency. Tools: Elemental descriptive statistics techniques and panel regression analysis were applied throughout the data analysis. For the purpose of data processing the author used STATA statistical software. Findings: The results confirmed the existence of a negative and statistically significant relationship between tax savings based on depreciation costs and profitability on the one hand, and capital structure, on the other. Thus, the results indicate the need of profitable companies to use high depreciation costs to provide a reduced burden of corporate income tax with a capital structure shifted to accumulated own financial resources. In addition, the results of the regression model showed the absence of a statistically significant effect of tax savings based on interest costs on capital structure. Contribution: The contribution of this paper is reflected in additional support to existing discussions on impact of corporate income taxes on capital structure. Further, the paper contributes to business practice by determining how corporate income tax burden could be reduced by choosing optimal financial mix.

scholarly journals Taxation and Dividend Payout: The Case of the Republic of Serbia

2021 ◽  
Author(s):  
Biljana Jovković ◽  
Stefan Vržina
Keyword(s):  
Income Tax ◽  
Dividend Policy ◽  
Statistical Tests ◽  
Transition Countries ◽  
Lower Number ◽  
Corporate Income Tax ◽  
Dividend Payout ◽  
The Republic ◽  
The Impact ◽  
Dividend Tax

Research Question: The paper investigates the relationship between taxation and dividend payout decisions of companies in the Republic of Serbia. Motivation: Including taxation in dividend policy discussion may allow for better understanding of decisions of companies to pay dividends. Prior worldwide research results on the impact of taxation on dividend policy are inconclusive, often contradicting and cannot be universally accepted. Despite abundant research in previous decades, the key drivers of dividend policy of companies are still unknown and there exists a so-called dividend puzzle. In addition, the research on dividend policy of companies in transition countries (including the Republic of Serbia) is relatively scarce. On the other hand, research in transition countries is important as transition countries have a significantly lower level of capital market efficiency and liquidity, having a lower number of joint stock companies and a lower number of companies that regularly pay dividends. Idea: Since tax burden may be a significant obstacle for companies to pay dividends, it may be relevant to research into whether corporate income tax burden has an impact on dividend payout ratio of companies, as well as the impact of dividend tax that shareholders have to pay on the dividend payout. Data: The study captured 23 companies listed on the Belgrade Stock Exchange between 2013 and 2018 that paid dividends in at least one year. In total, the research involved 92 dividend payouts. Research data have been retrieved from the Business Registers Agency of the Republic of Serbia. Tools: Research hypotheses are tested using EViews and IBM SPPS software. Statistical methods included descriptive statistics, correlation and regression analysis, as well as non-parametric statistical tests for independent samples. Findings: The analysis shows that corporate income tax does not impact a dividend payout ratio of companies, indicating that companies do not consider the corporate income tax when deciding on dividends, mostly due to the effective tax rates being considerably lower than the statutory tax rate of 15%. Also, statistical tests show that the dividend tax does not impact the dividend payout ratio, as there is no significant difference in the dividend payout ratio between companies whose largest shareholder is high taxed and companies whose largest shareholder is low taxed. Contribution: Research results may be of interest for company management when designing the dividend policy as well as for investors when deciding on shares investment in accordance with their tax preferences.

The Impact of Corporate Income Tax on Gross Domestic Product - The Case of the Republic of Serbia

2020 ◽  
Vol 58 (3) ◽  
pp. 311-326
Author(s):  
Jadranka Đurović Todorović ◽  
Marina Đorđević ◽  
Marko Krstić
Keyword(s):  
Gross Domestic Product ◽  
Income Tax ◽  
Quantitative Research ◽  
Income Taxes ◽  
Corporate Income Tax ◽  
Domestic Product ◽  
Negative Effect ◽  
The Republic ◽  
The Impact ◽  
Positive Effect

Abstract The importance of certain tax forms for the economy of any country is confirmed by the fact that they can be used to impact on the achievement of fiscal aims as they play a significant role when it comes to their share in a total amount of public revenue of certain countries. Another important characteristic of taxes is that they can affect the trends of gross domestic product (GDP) as one of the most important economic indicators of achieved development of a national economy. It is for this reason that we must point out that the authors will pay special attention to determining the impact that corporate income tax has on trends of gross domestic product in the Republic of Serbia and their interdependency. This will provide an answer to a question whether corporate income taxes have a positive effect on gross domestic product trends and what is its relation with this indicator. On the basis of quantitative research, through the application of regression analysis, the authors will confirm or refute the hypothesis concerning this problem. Finally, we will reach a conclusion which will offer answers to questions related to the impact of this tax type tax on the gross domestic product trends, the extent of the impact and its nature – whether it has a positive or a negative effect on gross domestic product trends in the Republic of Serbia

scholarly journals FISCAL RESPONSES TO THE COVID-19 PANDEMIC THROUGH REDESIGNING OF CORPORATE INCOME TAX IN THE REPUBLIC OF SERBIA

2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Jadranka Đurović-Todorović ◽  
Marina Đorđević ◽  
Milica Ristić-Cakić
Keyword(s):  
Income Tax ◽  
Tax Incentives ◽  
Corporate Income Tax ◽  
Economic Research ◽  
Economic Cycles ◽  
Academic Literature ◽  
Economic Decisions ◽  
Fiscal System ◽  
The Republic ◽  
The Impact

Corporate income tax (CIT) is a fundamental tool of the fiscal system due to its sensitivity to economic cycles and the impact it can have on the economic decisions of enterprises. Although the justification of corporate income tax has been called into question in the current academic literature, it is one of the tax forms that can be used to stabilize and develop the economy, especially after the crisis. For this reason, this paper provides an analysis of corporate income tax in Serbia. The paper will focus on reduced CIT rates and tax incentives. Our work aims to contribute to the literature in two aspects. The first is to provide evidence that it is necessary to carry out parametric reform of corporate income tax. Another is providing additional literature on the COVID-19 crisis to form the basis for further economic research.

scholarly journals The detection of earnings management through a decrease of corporate income tax

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Kawa Wali
Keyword(s):  
The Netherlands ◽  
Earnings Management ◽  
Income Tax ◽  
Tax Compliance ◽  
Financial Statements ◽  
Income Taxes ◽  
Corporate Income Tax ◽  
Tax Savings ◽  
Tax Payments ◽  
The Impact

AbstractThis paper explores the manner in which Dutch and German listed companies were able to manage earnings by the decline in corporate income tax toward the end of the 2000s. In addition, a recent article examines the existing state of earnings management at a European level in the Netherlands and Germany. This empirical study sampled 1350 firm-years for the Netherlands and 1850 firm-years for Germany between 2000 and 2018. The study indicated that those firms with larger prospect tax savings appeared to exercise earnings management to hasten discretionary accruals. In view of the income-reducing impact these discretionary deductions have on financial statements, the findings show corporate income taxes are a significant incentive. Since companies can reduce tax costs by deferring income tax to a subsequent year and lower the tax tariff cycle, theoretically, this tax reform incentivizes management to manage their earnings with the purpose of minimize tax payments. More research is needed into the impact of tax compliance on declining earnings management in this area.

The Fiscal Effects of Economic Immigration on Subnational Government Finance in Poland

e-Finanse ◽  
2019 ◽  
Vol 15 (1) ◽  
pp. 45-58
Author(s):  
Marzanna Poniatowicz ◽  
Agnieszka Piekutowska
Keyword(s):  
Social Policy ◽  
Income Tax ◽  
Research Question ◽  
Personal Income Tax ◽  
Government Finance ◽  
Subnational Government ◽  
Migration Research ◽  
The Impact ◽  
High Share

AbstractThe aim of the paper is to analyse the effects of economic immigration on subnational government finance (SNG) in Poland. The goal to achieve is to answer the following research question: what are the fiscal effects of immigration on SNG budget revenues and expenditures. To answer this question, logarithmic models were developed. The analysis refers to the years 2007-2016. In this respect, data from Statistics Poland - referring to budget revenues and expenditures of communes, cities of district status, districts and voivodeships - were used. As far as immigration statistics are concerned, data from the Ministry of Family, Labour and Social Policy were used. The results indicate an increase in both revenues and expenditures of SNG as a result of immigration. Such results can be explained inter alia by the nature of migration - research were focused on economic immigration. Results confirm that the level of employment of foreigners is one of the determinants shaping the fiscal effect of immigration. Moreover, the impact of economic immigration on SNG budget revenues and expenditures depends on the structure of this budget. This explains the differentiated results of the analysis of the impact of immigration on SNG in different countries. The positive correlation between immigration and SNG revenues in Poland can be associated with a high share of subnational governments in personal income tax revenues as this tax is one of the main categories of SNG revenues. Furthermore, results show that the impact of immigration on local government budgets in Poland is modest. This confirms the conclusions drawn by other authors (e.g. Auerbach and Oreopoulos), that in the long term, immigration cannot be considered as a potential instrument for resolving fiscal imbalances.

scholarly journals Measuring the Effects of Corporate Tax Cuts

2018 ◽  
Vol 32 (4) ◽  
pp. 97-120 ◽  
Author(s):  
Alan J. Auerbach
Keyword(s):  
Multinational Corporations ◽  
Income Tax ◽  
Capital Investment ◽  
Corporate Income Tax ◽  
Tax Law ◽  
Corporate Tax ◽  
The Law ◽  
Jobs Act ◽  
The Impact ◽  
Tax Cuts

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the changes in the treatment of traditional “C” corporations—those corporations subject to a separate corporate income tax. Beginning in 2018, the federal corporate tax rate fell from 35 percent to 21 percent, some investment qualified for immediate deduction as an expense, and multinational corporations faced a substantially modified treatment of their activities. This paper seeks to evaluate the impact of the Tax Cuts and Jobs Act to understand its effects on resource allocation and distribution. It compares US corporate tax rates to other countries before the 2017 tax law, and describes ways in which the US corporate sector has evolved that are especially relevant to tax policy. The discussion then turns the main changes of the Tax Cuts and Jobs Act of 2017 for the corporate income tax. A range of estimates suggests that the law is likely to contribute to increased US capital investment and, through that, an increase in US wages. The magnitude of these increases is extremely difficult to predict. Indeed, the public debate about the benefits of the new corporate tax provisions enacted (and the alternatives not adopted) has highlighted the limitations of standard approaches in distributional analysis to assigning corporate tax burdens.

scholarly journals Effect of Corporate Tax on Government Expenditure in Nigeria

2021 ◽  
Vol 1 (5) ◽  
pp. 157-171
Author(s):  
Patrick Ologbenla
Keyword(s):  
Income Tax ◽  
Consumer Price Index ◽  
Government Expenditure ◽  
Value Added ◽  
Corporate Income Tax ◽  
Value Added Tax ◽  
Independent Variable ◽  
The Government ◽  
The Impact ◽  
Bound Test

The study investigated the impact of corporate income tax on the government expenditure in Nigeria. Data on corporate income tax, value added tax, interest rate, gross domestic product, petroleum profit tax and consumer price index were collected and used as independent variable in the study while data on public expenditure were collected and used as independent variable in the estimated model. The ARDL bound test was applied and the result showed that corporate income tax have long run relationship that is significant with government expenditure. Other forms of tax such as value added tax and petroleum profit tax also have significant impact on government expenditure. The study concluded that corporate income tax should be sustained in order to ensure that government continue to fulfill her obligation of provision of social amenities that will promote the economic growth of the country.

scholarly journals Corporate Income Tax, Legal Form of Organization, and Employment

2018 ◽  
Vol 10 (4) ◽  
pp. 270-304 ◽  
Author(s):  
Daphne Chen ◽  
Shi Qi ◽  
Don Schlagenhauf
Keyword(s):  
Income Tax ◽  
Occupational Choice ◽  
Choice Model ◽  
Productive Efficiency ◽  
Corporate Income Tax ◽  
Legal Form ◽  
Tax Reduction ◽  
Capital Constraints ◽  
Dynamic Stochastic ◽  
The Impact

A dynamic stochastic occupational choice model with heterogeneous agents is developed to evaluate the impact of a corporate income tax reduction on employment. In this framework, the key margin is the endogenous entrepreneurial choice of the legal form of organization. A reduction in the corporate income tax burden encourages adoption of the C corporation legal form, which reduces capital constraints on firms. Improved capital reallocation increases the overall productive efficiency in the economy and therefore expands the labor market. Relative to the benchmark economy, a corporate income tax cut can reduce the nonemployment rate by up to 7 percent. (JEL E24, H25, H32, J23, J24)

Corporate real estate, capital structure and value creation

2017 ◽  
Vol 10 (3) ◽  
pp. 384-404 ◽  
Author(s):  
Maria-Teresa Bosch-Badia ◽  
Joan Montllor-Serrats ◽  
Anna-Maria Panosa-Gubau ◽  
Maria-Antonia Tarrazon-Rodon
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Structure Theory ◽  
Trade Off ◽  
Content Type ◽  
Default Option ◽  
Bankruptcy Costs ◽  
Corporate Real Estate ◽  
Tax Savings ◽  
The Impact

Purpose This paper aims to analyse the corporate rent-vs-buy decision on real estate through the trade-off theory and default option in the framework of a corporation that aims to optimise its capital structure. Design/methodology/approach The methodological core of this paper comprises the trade-off theory that approaches the optimal capital structure by counterbalancing debt tax savings with bankruptcy costs. Impacts on the default option and the default barrier are made explicit. The paper also explores the practical applicability of the renting scenarios in the European context by examining the regimes of real estate investment trusts in different countries from the demand-side of commercial renting. Findings Analytical relationships with tax savings, bankruptcy costs, default option and default barrier are identified for the renting-vs-buying real estate decisions. Research limitations/implications The theoretical model assumes simplifications, such as constant debt, to make it operational. The paper centres exclusively on the trade-off capital structure theory. Practical implications This paper is an analysis of corporate real estate decisions together with capital structure. Applications are not only quantitative but also conceptual and strategic. Originality/value Identifying the main variables that govern the impact of corporate real estate decisions on capital structure and interweaving different approaches generates a conceptual framework that enlightens strategic thinking in this field.

scholarly journals EMPIRICAL RELATIONSHIP BETWEEN CORPORATE INCOME TAX, GOVERNMENT REVENUE, AND EMPLOYMENT IN OECD COUNTRIES

2021 ◽  
Vol 7 (3(43)) ◽  
pp. 18-33
Author(s):  
Vassilios Zoumpoulidis
Keyword(s):  
Correlation Analysis ◽  
Income Tax ◽  
Empirical Relationship ◽  
Oecd Countries ◽  
Corporate Income Tax ◽  
Government Revenue ◽  
Corporate Tax ◽  
The Impact

This paper applies the technique of correlation analysis to find out the impact of corporate tax on government revenue and employment in OECD countries. The findings of the study suggest that there is no relationship between corporate income tax, government revenue, and employment during 2000 and 2019.

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