Assessment of the Influence of Tax and Socio-Economic Factors on the Decision on the Territorial Location of Business in Russia

Abstract

One of the most important issues of regional development and planning is to determine the factors influencing the decision-making on the placement of new companies. The purpose of the study is to study the influence of socio-economic and tax factors on business decisions regarding the territorial location of a company in Russia. Panel data for the period 2017–2021 are considered. in all regions of Russia. We have determined a set of tax factors (revenues to the consolidated budgets of regions, the federal budget, the local budget) and socio-economic factors (the number of priority development areas in the region, the number of closed companies, the average salary in the region, the presence of a million-plus city in the region , the number of able-bodied population in the region, the year the company was opened and the region where the company operates). These factors may have the greatest influence when deciding on the location of a business; they will to a greater extent characterize the situation as a whole in the country or federal district. The tools of correlation-regression analysis were applied. The developed models make it possible to assess the significance of each of the factors at the country level and at the level of federal districts, as well as to identify which areas of regional policy needs to be worked on to create attractive conditions for attracting new companies. The study confirmed two hypotheses. First, it is confirmed that the tax factor is a significant factor when deciding on the territorial location of a business in Russia. Based on the results obtained, it can be concluded that the tax factor in Russia as a whole is not of high importance, but in some federal districts it is a significant factor. Second, it is confirmed that tax and socio-economic factors have a different impact in different regions when deciding on the territorial location of a business in Russia. The results show that the most significant factors are the factors of socio-economic development of the region and the presence of large cities.