Corporate Income Tax Burden Research Articles

Corporate Income Taxation and Unemployment: A Case Study of Pakistan and India

Understanding the incidence of corporate taxation is important for a country in order to improve their policies to enhance business environment and job growth. The study is based on empirical investigation of corporate income tax and its impact on unemployment in case of Pakistan and India for period of 2000 to 2019.To find the appropriate results, the OLS regression technique has been utilized and the results are examined separately and comparatively. The results showed corporate income tax has insignificant effect on unemployment in both country Pakistan and India, except some control variables (working age population and urban population). Results further highlighted that still there is no significant impact of corporate income tax (CIT) on employment. The reason may be very little variation in the CIT and unemployment data of both countries from the assigned time and may the burden of corporate income tax may shift to the tertiary markets (consumers).

The INFLUENCE OF REVENUE, OPERATIONAL COSTS, GROSS MARGIN, PROFITABILITY, DEBT TO EQUITY RATIO (DER) ON CORPORATE INCOME TAX EXPENSES IN COAL MINING COMPANIES LISTED ON THE BEI ​​FOR THE 2019 - 2022 PERIOD

The international world in recent months has been shocked by a pandemic, namely an outbreak of a disease caused by a virus called corona or better known as Corona Virus Diseases-19 (Covid-19). The sector that was also affected by the outbreak of the pandemic in 2020 was the mining sector, one of which was coal mining. Sales volume is closely related to controlling operational costs, because operational costs show how the company generates its sales volume. Operating costs are a number of costs that must be incurred by a company to support the operations or activities carried out by the company. Gross profit margin is a ratio used to measure the amount of gross profit percentage on net sales. Profitability ratio is a ratio used to measure a company's ability to generate profits from its business activities. Good performance is aimed at generating maximum profits for the company through successful management. Debt to equity ratio is a type of leverage ratio. Debt to equity ratio is a ratio used to find out how much part of each rupiah of capital is used as debt collateral. In calculating income tax, profit is an important component that determines the size and size of the income tax burden. The tax rate is used as multiplication by taxable profit. The method used is quantitative descriptive. The object of this study is a Coal Mining Company listed on the Indonesia Stock Exchange with 11 companies with the technical analysis used is multiple linear regression using the F test and the t test. The variables used in this study are the variables bound by Corporate Income Tax Burden (Y), the independent variables are Revenue (X1), Operating Costs (X2), Gross Margin (X3), Profitability (X4) and Debt to Equity Ratio (X5). The results of the study show that both simultaneously and partially the independent variables are Revenue, Operating Costs, Gross Margin, Profitability and Debt to Equity Ratio have an influence and significantly on the Corporate Income Tax Burden.

Nothing comes for free: Evidence from a tax reduction of China

Using data from the National Taxation Survey from 2009 to 2015, this paper conducts a quasi-natural experiment on the tax reduction reform of "replacing business tax with value-added tax" (RBTVT) in China to empirically explore the impact of the fiscal pressure caused by the turnover tax reduction on the corporate income tax burden. The paper tries to explain why it is difficult to reduce the tax burden through tax reduction from the perspective of fiscal pressure. According to the empirical results, an extensive tax reduction creates a "tax substitution" effect, i.e., the stronger the tax reduction effect of the RBTVT, the greater the motivation of local governments will be to shift the fiscal pressure to enterprises through taxation, resulting in an increased local corporate income tax burden. In regards to "who pays the tax", the paper indicates that non-state-owned enterprises, small and micro enterprises, and non-RBTVT enterprises are the main bearers of the local fiscal pressure shift. With further examination, the paper finds that there is an obvious "tax substitution" effect in regions with poor business environments or large governments. In the mechanism section, the paper finds that strengthening tax administration, decreasing tax-rate reductions for enterprises, and levying excessive tax are the primary "tax substitution" methods. In the extended analysis, our results suggest that enterprises are not the ultimate bearers of fiscal pressure because they can shift the pressure on them to workers by reducing the cost of wages and benefits. Besides, the results show that cutting fiscal expenditure and improving fiscal expenditure efficiency can effectively alleviate the "tax substitution" effect. Finally, we find that the "tax substitution" effect discounts the impact of tax reduction, but does not entirely nullify it.

기업의 규모에 따라 법인세가 기업투자와 근로자 임금에 미치는 영향 분석

Given empirical evidences about the effect of corporate income tax policy is mixed, we investigate whether the corporate income tax burden would affect firm’s investment and worker’s wages differently by firm size using the KISVALUE data with panel estimation model. Fixed effect estimation results show that firm’s investment tends to fall significantly as a corporate income tax burden increases. Such a negative association turns out to be greater for small-sized firms. These results support the view that the reduction in the corporate income tax burden would lower the user cost of capital, thus firm would increase investment accordingly. The same result is found for the effect on the worker’s wage. The negative effect of the corporate income tax burden on the worker’s wage appear to be greater in the small sized firms. These findings would contribute to the literature in the corporate income tax and provide relevant tax policy implications.

Analysis of the Implementation of Tax Planning in Efficient Corporate Income Tax at PT. XYZ on the ISE

This study aims to analyze the tax planning application at PT. Campina Ice Cream Industry, Tbk‘s corporate income tax efficiency in accordance with the general provisions of applicable taxation. This research is motivated by the development of the business world which is influenced by the provisions of tax laws and the development of companies that want their business to generate maximum corporate profits, so that the company will receive capital to improve the company's operational performance.Types of researchThis is a quantitative descriptive study. The technique used in the data collection procedure is documentation, the data is obtained from the official website of the Indonesia Stock Exchange (IDX) 1 Profit and Loss Report and Profit and Loss Report after Fiscal Reconciliation from PT Campina Ice Cream Industry, Tbk. by analyzing the data referring to the theoretical basis, reviewing the processed data and its application based on the General Provisions of Taxation for the efficiency of Corporate Income Tax (PPh).Research resultsthis can be a guidance for companies in implementing Corporate Income Tax Calculation with cost efficiency based on legality, and consistent theories so that research shows that the implementation of tax planning by PT. Campina Ice Cream Industry, Tbk. will prove to be able to streamline the tax burden. The results of the tax planning conducted by PT. Campina Ice Cream Industry, Tbk. is the burden of corporate income tax which also decreases, this cannot be said to be effective because the taxable profit of the company decreases. It is said to be effective efficient if the company's profit has increased. Tax planning can be applied as a way of tax management that can strengthen the company's tax burden efficiency value.

ANALISIS PERENCANAAN PAJAK UNTUK PPh PASAL 21

This study aims to determine how the impact of the application of the Gross Method, Net Method, and Gross Up Method on the calculation of Income Tax Article 21 and which methods can be used as an alternative to tax efficiency. The research method used is comparative descriptive with quantitative measurements with primary data collection techniques, namely in the form of subject data from illustrations and documentary data in the form of a list of employee salaries in 202X from PT.X. The results showed that by using the Gross Method on the application of salary data in202X resulted in reduced employee income. The calculation using the Net Method resulted in the company's net profit increasing due to positive fiscal correction. Meanwhile, by using the Gross Up Method, the company provides tax allowances inthe same amount as the Income Tax Article 21 owed, in addition to the application of the Gross Up Method, the salary costs increase along with the decrease in the company's net income which will automatically reduce the burden of corporate income tax. From the results of these studies, it can be concluded that tax planning for PPh Article 21 with the Gross Up Method will provide benefits not only for the company but also for employees

ANALISIS PENERAPAN PERENCANAAN PAJAK (TAX PLANNING) UNTUK MEMINIMALKAN BEBAN PAJAK PENGHASILAN BADAN PADA CV. XXXL

ABSTRACTThis study aims to: (1) analze the application of tax planning in minimizing the burden of corporate income tax on CV. Bina Mandiri Banua, (2) ind out and analyze whether tax planning (tax planning) that is carried out can minimize corporate income tax compared to before CV. Bina Mandiri Banua’s tax planning. The design of this research is a qualitative research with descriptive method. Data collection was done by interview, observation, and documentation. The result of the study indicate that tax planning carried out by bookkeeping methods, fiscal corrections, gross up methods for PPh 21 and the provision of allowances for food/drink and transportation of employees has a major influence on the magnitude of the corporate income tax burden. The result of the analysis show that tax planning can minimize the corporate income tax burden borne by the company, in 2019 before tax planning Rp. 4.648.909,- after tax planning becomes Rp. 3.224.192,- In 2020, before tax planning, Rp. 20.571.594,- after tax planning becomes Rp. 5.989.722,- In 2021, before tax planning Rp. 10.831.213,- after tax planning to Rp. 2.671.219,-. This shows that the corporate income tax burden has been minimized, seen from the total efficiency of tax savings of Rp. 24,166,582 in the 2019-2021 period.

Opterećenje porezom na dobitak u multinacionalnim osiguravajućim grupama - slučaj Hrvatske, Srbije i Slovenije

The corporate income tax burden may be an important factor in investment decision-making. Multinational companies pay close attention to the analysis of corporate income tax burden in the countries where they operate and plan to invest. On the other hand, the corporate income tax burden may significantly vary across countries due to different statutory rates and rules for calculating taxable income. The corporate income tax burden in subsidiaries of multinational insurance groups in Croatia, Serbia, and Slovenia is analyzed in this paper. It is shown that the corporate income tax burden in insurance companies significantly differs between studied countries. Insurance companies in Serbia have by far the lowest tax burden, notably owing to tax loss carryforward and interest on government securities that are exempt from taxation. Although Slovenia has the highest statutory tax rate, insurance companies in Croatia have the highest average corporate effective tax rates. Many interest groups, particularly owners and managers of multinational insurance groups, may find the research findings interesting.

Tax Burden and Influencing Factors During Waste Incineration Power PPP Project Operation

Waste incineration power generation is an effective way to treat domestic waste as a resource, an effective way to reduce carbon emissions, and an important model for developing the circular economy, practicing the spirit of emission reduction promoted by COP26. The tax burden during operation of PPP (public-private partnerships) projects in this field directly affects the selection and development of the supply model. This paper selected the data of enterprises participating in the waste incineration power generation PPP project from the Ministry of Finance's PPP project management database and the financial data of the company from the CSMAR database for the corresponding year, and used tax burden evaluation indicators to empirically analyze the tax burden of the operation period of a waste incineration power generation PPP project from the perspectives of value-added tax and enterprise income tax. It was found that the asset-liability ratio, the income capacity from electricity sales, the profitability, and whether the preferential tax policy of "three exemptions and three halves" could significantly affect the corporate income tax burden of the project had to be considered. Combined with current preferential tax policies, this paper provided targeted optimization suggestions such as emphasizing the role of a "debt tax shield", optimizing the output structure, and extending the duration of the "three exemptions and three halves" tax incentives. The research in this paper is helpful to find an effective way to reduce the tax burden of enterprises, improve the economic benefits of waste incineration power generation projects, and also provide a reference for the government to formulate more reasonable tax policies and promote a better tax system. Received: 23 April 2023 | Revised: 16 May 2023 | Accepted: 7 June 2023 Conflicts of Interest The authors declare that they have no conflicts of interest to this work. Data Availability Statement Data available on request from the corresponding author upon reasonable request.

Tax-Cut Policies, Accounting Conservatism, and Corporate Tax Burden Stickiness: Empirical Analysis from China

This study explores the relationship between tax-cut policy, accounting conservatism, and corporate tax burden stickiness in Chinese listed companies from 2008 to 2019. The primary objective is to identify the underlying reasons for continued high levels of corporate tax burdens despite the introduction of tax-cut policies. An econometric model was developed to analyze the transmission mechanism of these policies affecting corporate tax burden stickiness to achieve this goal. The tax burden stickiness refers to the mismatch between the objective and subjective tax burdens. Results reveal four primary findings: Firstly, macro tax-cut policies induced micro-enterprises to soften their accounting conservatism, leading to increased corporate tax burden stickiness. Secondly, the reduced quality of corporate accounting reports, influenced by tax-cut policies, contributes to corporate income tax burden stickiness. In contrast, the VAT tax burden remains unaffected. Thirdly, compared to state-owned enterprises, private enterprises responded more sensitively to tax reduction policies by significantly decreasing their accounting conservatism level and increasing corporate tax burden stickiness. Finally, high-tech manufacturing enterprises recorded the highest increase in corporate tax burden stickiness, suggesting that different robust accounting policies exist across various industries and may be critical factors determining corporate tax burden stickiness. In practical terms, this study provides important insights into improving businesses’ understanding of tax burden patterns, enabling improved resource allocation of taxes accordingly. Additionally, it focuses on enhancing accounting conservatism to alleviate the pain of high tax burdens on such businesses. Ultimately, minimizing the stickiness of tax burdens will allow fiscal and taxation policies to better flex their regulatory muscles toward achieving effective and stable economic growth.

PENGARUH UKURAN PERUSAHAAN, RASIO HUTANG PADA MODAL, MARGIN LABA KOTOR DAN BIAYA OPERASIONAL TERHADAP BEBAN PAJAK PENGHASILAN BADAN

This research was conducted to analyze The Effect of Firm Size, Debt to Equity Ratio, Gross Profit Margin, and Operational Cost on Corporate Income Tax Burden either partially or simultaneously. The sampling method is purposive sampling. The number of samples used in this study were 10 pharmaceutical sub-sector companies listed on the Indonesia Stock Exchange (IDX) with a total sample of 50 data. The type of data is secondary data sourced from the Indonesia Stock Exchange. The data analysis method used is multiple linear regression analysis. The findings of this study are based on the results of the t-test, it can be concluded that partially there is a negative influence between the ratio of DER to corporate income tax expenses and for operating costs, it partially has a positive effect on the burden of corporate income tax on pharmaceutical companies listed on the Stock Exchange for the 2016-2020. Partially, company size and gross profit margin have no effect on the burden of corporate income tax on pharmaceutical companies listed on the IDX for the 2016-2020. Based on the results of the F test, it is concluded that company size, DER, GPM and operating costs have a positive effect on corporate income tax expenses in pharmaceutical companies listed on the Indonesia Stock Exchange for the 2016-2020.

Važnost odloženog poreza na dobitak u osiguravajućim društvima - slučaj Republike Srbije

Insurance companies in the Republic of Serbia (RS) are required to report deferred income tax in accordance with the International Accounting Standards (IAS) 12 - Income Taxes. They recognize deferred tax assets and deferred tax liabilities on the balance sheet or deferred tax expenses and deferred tax income on the income statement. This paper examines the materiality of the deferred income tax in Serbian insurance companies, as well as its impact on assessing profitability and corporate income tax burden. The research conducted from 2017 to 2020 covered 16 insurance companies, and has shown that the effective tax rates in an average Serbian insurance company are lower than the prescribed rate of income tax. The research results have shown that typically, deferred tax does not materially represent a significant item in a statement of financial position of insurance companies. In addition, when assessing profitability and corporate income tax burden of insurance companies, deferred income tax is not a significant item on a balance sheet.

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

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.

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

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.

Obelodanjivanje o poreskom riziku u finansijskim izveštajima - slučaj banaka u Republici Srbiji

An increasing number of companies has been paying attention to tax risk in the last decade. Tax risk may arise as a result of unintentional employee mistakes when calculating tax burden, but also as a result of implementation of risky tax avoidance strategies. Research in this paper is conducted in order to study the determinants of disclosure of tax risk in banks in the Republic of Serbia. Therefore, the research captured twenty-six banks in the period between 2018 and 2020. Results show that most banks disclose information on tax risk, though they are only formal and generalized. In addition, there is identified a significant number of banks that disclose the information on tax risk in a similar manner. Logit and probit regression models showed that less profitable banks and those with lower corporate income tax burden disclose more information on tax risk. Banks that are majority domestically owned also disclose more information on tax risk. In addition, research results are robust to important changes of the research model. Research results may be of interest to many interest groups, in particular to banks' management and employees in the financial reporting sector, national tax authorities, auditors of financial statements and national bodies for accountants' certification.

Corporate income tax burden for SMEs: The case of Bosnia and Herzegovina

<jats:p>Small and medium enterprises (SMEs) play a significant role in the economic development of both advanced and developing countries. Some earlier research showed that taxation and compliance costs have a significant effect on economic growth, development and performance of the business sector. For this reason, our research focuses on tax compliance costs imposed on the SMEs in Bosnia and Herzegovina (B&H), which is a transition and post-conflict country with a complex tax system structure. This complexity is particularly highlighted in the direct taxation system, hence the focus of this research is on corporate income tax (CIT) compliance costs. Our methodology is based on simulation of tax compliance costs between different entities in B&H - Federation of B&H (FB&H) and the Republika Srpska (RS), as well as measuring the effective tax burden for SMEs in B&H and the region. Our simulation of the CIT return of a company "X "in line with the entity law suggests that the effective tax burden is higher in RS than in FB&H entity. This is further confirmed with the effective tax rate formula applied in the second part of the research using data from the AMADEUS database. This result has an important policy implication for the fiscal authorities in B&H, as very often public discourse goes in the opposite direction to our finding.</jats:p>

TAX REFORMS FOR THE DEVELOPMENT OF FISCAL SPACE

A reduction of the tax burden on corporate income in order to stimulate drivers of economic development has become the important issue of tax reform in many countries in recent decades. Tax competition forces national governments to take well-balanced solution on increasing outward and domestic investments as well as ensuring the fiscal capacity of the budget to cope with urgent socio-economic problems under enhancing fiscal risks. The purpose of the article is to assess the impact of tax reforms, addressing reducing the corporate income tax burden, on the fiscal space and investment processes in the EU countries and Ukraine, to establish directions of improvement of the tax system in Ukraine and other transition economies in order to spur the expansion of fiscal space. The research subject covers tax policy settings that shape fiscal space development. Research methodology. In accordance with the purpose of the article, the research methods are set as follows: abstract-logical; systemic analysis; analysis and synthesis; graphical method. Findings. By summing up theoretical ideas on the issue of feasibility of cutting corporate income tax, we have arrived at the conclusion that this measure has a significant impact on the improvement of tax competitiveness of the national economy. The gain from its application is confirmed by the best practices of many European countries. The results of the tax reform in Ukraine have proved that a traditional approach to the choice of tax issues – in contrast with developed economies – do not comply with theoretical provisions on increasing the competitiveness of the national economy and fostering investments. This is conditional on the specific tax effects in Ukraine due to the restriction of the key economic freedoms (investment, financial, property rights protection and judicial effectiveness) needed for successful entrepreneurship, as well as of a high rate of corruption, which increases the costs of business activity. Such effects include, in particular, a drop of tax revenues in the short and long term while reducing the level of corporate income taxation; a high level of tax evasion, capital outflow instead of expanding investment in the national economy. It is argued that the emphasis while carrying out tax reforms and expanding fiscal space in transition economies considering the specific effects of changing corporate income tax provisions, should be made on ensuring the long-term sustainability of public finances through measures of budget adjustments aimed at avoidance shifting the existing fiscal problems on future generations; harmonization of national tax legislation with the EU regulations and prevention of tax evasion; increasing the financial capacity of enterprises by introducing targeted innovation tax incentives, which will gain higher competitiveness of the country in the world markets and as a result facilitate the growth of the country’s future revenue receipts.

The investment activity of Russian business: Relationships with corporate income tax burden

Subject. This article assesses the role of tax incentives for the Russian business' investment behavior. Objectives. The article aims to identify the relationship between the corporate income tax burden as an indicator responding to tax benefits application and the investment activities of Russian companies. Methods. For the study, we used the methods of analysis and synthesis, and the systems approach. The analysis covers the period from 2012 to 2018. The data of the Russian Federal State Statistics Service, Federal Tax Service of Russia, and the Ministry of Finance of the Russian Federation are the source of information for analysis. Results. The article summarizes the characteristics of the investment activity of the Russian business. However, the article does not reveal any obvious relationship between the income tax burden and the investment activity of the Russian business in the 2010s. There is also no link found between fixed investment and return on assets. Conclusions. The increase in income tax burden in the late 2010s, accompanied by a decrease in profitability, poses a threat to the active investment development of Russian organizations.

Determinante profitabilnosti poljoprivrednog sektora u Vojvodini - uloga poreza na dobitak

Due to considerable share in total employment and foreign trade exchange, agriculture represents an important sector of the Serbian economy. It is, therefore, necessary to continuously analyze the financial performance of agricultural companies and key determinants of financial performance. The objectives of this paper are to analyze the corporate income tax burden of agricultural companies in Vojvodina, as well as its impact on company profitability. Statistical tests showed that effective corporate income tax rates (ETRs) in agricultural companies are significantly lower than the statutory corporate income tax rate. Furthermore, nearly 69% of observations have both a current ETR and cash ETR of 0%, which indicates that agriculture is an industry with an exceptionally low corporate income tax burden. Panel regression showed that agricultural companies with lower ETRs are more profitable than companies with higher ETRs. Results of the analysis are not sensitive to changes in corporate income tax burden and profitability proxies.

Sharing the Burden? Empirical Evidence on Corporate Tax Incidence

AbstractThis study investigates the direct incidence of the corporate income tax (CIT) through wage bargaining, using an industry-region level panel dataset on all corporations in Germany over the period 1998-2006. For the first time we account for employment effects which result from tax-induced wage changes. Workers share in reductions of the CIT burden; yet, the net effect of wage bargaining on the corporate wage bill, after an exogenous €1 decrease in the CIT burden, is as little as 19-28 cents. This is about half of the effect obtained in prior literature focussing on wages alone.