Corporate Tax Burden Research Articles

Study on the Influence of Big Data Tax Collection and Administration on the Stickiness of Corporate Tax Burden

Study on the Influence of Big Data Tax Collection and Administration on the Stickiness of Corporate Tax Burden

The role of regional tax autonomy, firm size, and business groups in tax avoidance: evidence from Spain

ABSTRACT This paper investigates the influence of regional tax autonomy, firm size, and business group affiliation on corporate tax burden in a large sample of Spanish firms, including non-listed firms, from 2007 to 2016. Our findings reveal that firms located in tax-autonomous regions exhibit lower effective corporate tax rates (ETR), providing new empirical support for the horizontal tax competition theory. Additionally, we identify a positive relationship between firm size and corporate tax burden, aligning with the political cost theory. Furthermore, we find that group-affiliated firms face a higher ETR than independent firms, and that group affiliation attenuates the differences in the tax burden experienced by large and small firms.

Tax motivated vertical FDI and transfer pricing

We examine a domestic downstream producer that acquires a foreign input supplier with the aim of manipulating the transfer price and shifting profits from a high-tax to a low-tax country. The multinational enterprise faces a trade-off: insourcing the input at a high transfer price reduces the corporate tax burden but at the cost of increasing the input cost of its downstream division, which reduces domestic sales and profits. The optimal transfer price balances this trade-off. Regulation under the arm’s length principle is shown to reduce the transfer price, which reduces distortion in the domestic production and expands the region in which vertical FDI benefits consumers and social welfare in the home country. We also show that promoting downstream competition could help align private and social incentives, reinforcing the positive effects of regulation.

Effective Tax Rates and Firm Size under Turnover Tax: Evidence from a Natural Experiment on SMEs

Abstract Taking advantage of Romania’s compulsory and unique presumptive tax system (turnover tax) for the smallest of the small- and medium-sized enterprises (SMEs), which unequivocally allows grouping the companies into two subsamples according to their tax status (the smallest of the SMEs, i.e. micro-companies for tax purposes, subject to alternative turnover tax vs larger SMEs subject to regular profit tax), the papers compute and compare three versions of firm-specific effective tax rates and brings first-time empirical evidence on the effects of turnover taxation on corporate tax burden. The results show not only that in Romania, the turnover tax is now the prevailing tax system, massively displacing the profit tax, but also it is more burdensome in terms of taxes actually paid relative to the firm size. Moreover, turnover taxation means that taxes are due irrespective of the profitability of a company, making the share of companies who paid taxes despite having losses much higher for micro-companies than for larger SMEs, which translates into higher public finance receipts, at the cost of lower tax equity. Since the corporate tax burden triggered by turnover taxation remains under the radar of even the most qualified policy reports, the results offer relevant lessons for other jurisdictions and have valuable policy implications.

Geographic dispersion, tax administration and corporate tax burden: evidence from China

PurposeFrom the perspective of local government tax administration, the impact of geographic dispersion on the corporate tax burden is investigated in this paper.Design/methodology/approachUsing unbalanced panel data with a sample of listed companies from 2003 to 2020 in China, this paper focuses on the effect of geographic dispersion on corporate tax burden and the mechanisms.FindingsIt is found that corporate tax burden is positively related to geographic dispersion. It is also found that geographic dispersion affects the corporate tax burden by increasing the effort of local government tax administration. In addition, the relation between geographic dispersion and corporate tax burden is more pronounced for local SOEs prior to the implementation of Golden Tax Project III and in cases where local governments face stronger financial pressure to obtain revenue.Originality/valueThis study has important implications for the promotion of the coordinated development of the regional economy, as well as the legalization, modernization and informatization of tax administration.

THE IMPACT OF PROFITABILITY AND LEVERAGE ON TAX AGGRESSIVENESS WITH INCOME SMOOTHING AS THE MEDIATOR

Information asymmetry and differences in interests between agents and principals are unavoidable problems in agency relationships. Agents with better information than other parties try to maximize their benefits by managing or manipulating reported accounting numbers. Profitability and leverage are common considerations for companies in carrying out income smoothing so that profits are stable and the company looks in good condition in the eyes of stakeholders. In addition, it is also related to the size of the corporate tax burden, so both can be factors that influence the level of corporate tax aggressiveness. This study aims to analyze the direct and indirect effects of profitability and leverage on tax aggressiveness and test the mediation of income smoothing on the effect of profitability and leverage on tax aggressiveness. The research sample was determined using a purposive sampling technique of 26 consumer non-cyclical sector companies listed on the Indonesia Stock Exchange in 2018-2020. Data were analyzed using the WarpPLS 7.0 analysis tool. The results of this study show that profitability and leverage affect tax aggressiveness. However, income smoothing does not affect tax aggressiveness. Income smoothing could not mediate the effect of profitability and leverage on tax aggressiveness. There is no indirect effect between profitability and leverage on tax aggressiveness.

Tax substitution: The impact of home-purchase restrictions on corporate tax burden

Tax substitution: The impact of home-purchase restrictions on corporate tax burden

Do environmental target constraints promote corporate pollution reduction?

In order to improve the environment quality, in 2007 the Chinese government implemented a policy document on environmental target constraints called the ‘Letter of Responsibility’. Based on this impact, we collect the environmental target constraints (ETC) data of 276 cities in China, and use the Differences-in-Differences (DID) method to evaluate the impact of local government ETC on enterprise pollution. The results show that ETC can significantly curb the pollution emission level of enterprises. This effect varies significantly between enterprises of different regions, scales, ownerships, and total factor productivities (TFPs). ETC can promote enterprise emission reduction by inducing green innovation, improving corporate tax burden and financing constraints, and promoting enterprise exit. Economic growth target constraints will weaken the inhibitory effect of ETC on corporate pollution. This paper provides important empirical evidence for deepening China’s official environmental assessment system and environmental governance.

Natural disasters and corporate tax burden: Evidence from chinese energy sector

Given the importance of energy company in disaster reconstruction and economic stability, we focus on the intrinsic link between natural disasters and energy corporate tax burden. This study examines the impact of natural disasters on the energy corporate tax burden using panel data for listed energy companies in China from 2003 to 2021. We robustly find that the higher the number of natural disasters in an energy company's region, the lower the corporate tax burden. The mechanism analysis suggests that the government, motivated by concerns that energy companies are in business distress and facing financing difficulties, is the mechanism by which natural disasters lead to lower energy corporate tax burdens. In addition, the above effects are more pronounced among energy companies that are larger, have a higher market share, and are subject to stronger government intervention. We provide theoretical basis and data support for post-disaster reconstruction and economic stability.

Does it pay to be green? The impact of emissions reduction on corporate tax burden

Is there any benefit to reducing emissions for firms? Based on the China Industrial Enterprises Emission and Pollution Database and the Annual Survey of Industrial Firms, this study investigates the impact of firms’ emissions reduction on their tax burden. We find strong and consistent evidence of a significant reduction in the tax burden following a reduction of firms polluting emissions. This effect mainly manifests in large-scale firms, firms whose taxes are collected by the local taxation bureaus (LTB), and firms in regions with stricter environmental regulations. We also find that tax breaks and government subsidies are important pathways to reduce corporate tax burden. Further exploration documents that firms’ bargaining power and local tax enforcement have significantly moderating effects on the relationship between firms’ emissions reduction and their tax burden.

Pengaruh Profitabilitas, Leverage, Ukuran Perusahaan dan Komisaris Independen terhadap Tax Avoidance (Studi Empiris pada Perusahaan Manufaktur Sub Sektor Logam yang terdaftar di BEI periode tahun 2018-2022)

Tax Avoidance is a company's effort to minimize the corporate tax burden paid by looking for weaknesses in tax regulations. This study aims to examine the effect of profitability, leverage, company size and independent commissioners on tax avoidance in metal sub-sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period 2018-2022. The sample of this study consisted of 10 metal sub-sector manufacturing companies listed on the IDX which were selected by purposive sampling method. The analysis technique used in this research is analysis using multiple linear regression with the Eviews-12 program. The results of this study indicate profitability, and independent commissioners have a negative effect on tax avoidance, while the leverage variable and company size have no effect on tax avoidance. And the results of the determinant value (R2) in this study amounted to 28.7%, meaning that profitability, leverage, company size and independent commissioners contributed 28.7% to tax avoidance and the remaining 71.3% was explained by other variables not used in this study. Keywords : Profitability, Leverage, Company Size, Independent Commissioner on Tax Avoidance.

Tax uncertainty and corporate innovation output: evidence from China

Tax incentives are an important driving force for enterprises to ease financing constraints and promote innovation. Current studies focus on the tax-reduction effect of corporate tax incentive policies, paying less attention to the tax uncertainty engendered by tax reform. This study explores whether the predictability of corporate tax burdens is a key restrictive factor in corporate innovation. It focuses on the impact of tax uncertainty arising from the tax reform process on enterprise innovation, proposing a multidimensional measurement method to identify corporate tax uncertainty. The results show that tax uncertainty significantly inhibits corporate innovation and that its influence channels operate mainly through corporate financing constraints and information transparency. Further heterogeneity analysis reveals that a better regional economic system environment, greater tax enforcement effort, and digital transformation can restrain the negative impact of tax uncertainty on enterprise innovation. These findings enrich the literature on the factors influencing corporate innovation behavior and extend the research on tax reform, providing an innovative perspective for interpreting enterprises’ tax burden. Furthermore, it offers practical implications for tax reduction reforms and guidelines for enterprise innovation.

How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts

This research examines how environmental regulation impacts corporate tax burdens. Although the literature argues that environmental policies exacerbate firms' tax avoidance, we offer a new insight from the perspective of government behaviour. Using the difference-in-differences approach and data on Chinese listed manufacturing firms from 2003 to 2019, we find that the establishment of environmental courts in China results in a 1.70 percent increase in corporate effective tax rates. The effect is significant only for private firms and is more pronounced in cities with stringent environmental regulations and fiscal stress. Tougher tax enforcement and the reduction of preferential tax policies are two potential channels. Given that environmental regulation reduces the tax base, local governments implement tougher tax enforcement and reduce preferential tax policies to maintain necessary tax revenues. Our study highlights the role of government in determining corporate tax burdens and evaluates the hidden tax costs of environmental regulation.

Local government debt and corporate tax burden: A perspective based on the trade-off of government tax collection and management.

As an important source of local fiscal revenue, will enterprise tax be affected by local government debt? What role do the government's tax collection and management motives and behaviors play in this effect? By investigating the impact of local government debt on the actual tax burden of enterprises, this study shows that local governments have a trade-off of tax collection in the process of resolving the debt repayment pressure. The study finds that, in general, the expansion of local government debt has increased the actual tax burden of enterprises, which is mainly reflected in non-state-owned enterprises and enterprises that are collected and managed by the local tax department. The results of the mechanism test show that local debt pressure will encourage local governments to adjust the intensity of tax collection and tax incentives, and then increase the level of tax burden of enterprises in the jurisdiction. Furthermore, the heterogeneity test that distinguishes the institutional environment shows that there are significant differences in the taxation behavior of local governments and the impact of the corporate tax burden in different regions. Specifically, the strict tax behavior of local governments is more significant in regions with better institutional environment, while regions with worse institutional environment, due to the lack of market competitiveness, are more inclined to provide a relaxed tax collection environment to enterprises in their jurisdiction, so as to stabilize the tax base and resolve debts through long-term tax growth. In the context of unbalanced regional development, this study provides empirical evidence that the expansion of local debt affects the taxation behavior of local governments, and then affects the actual tax burden of enterprises in the jurisdiction, which is helpful to understand the government behavior during the transition period of developing countries, and provides policy implications for improving the public debt management system, creating a fair tax environment, and promoting high-quality economic growth.

The Effect of Auditors Change on Corporate Tax Burden

The Effect of Auditors Change on Corporate Tax Burden

Collusion and corporate tax burden: Firm‐level evidence from China

AbstractGovernment‐firm collusion and corporate tax avoidance will result in tax loss, which has spawned several challenges that hinder economic growth and political stability. Based on the microdata of the National Tax Statistics Database (NTSD) of China from 2010 to 2014, this paper estimates the impact of government‐firm collusion on corporate tax burden. Using the business entertainment expenses as a measure of collusion, we find that government‐firm collusion significantly reduces corporate tax burden and increases tax avoidance. Mechanism analysis shows that collusion reduces corporate tax burden by providing firms with preferential tax policies and weakening taxation supervision of tax authorities. In addition, we find that reaping enormous benefits is the primary motivation for government‐firm collusion. The reduction effect of collusion on tax burden will be more substantial if the parties involved can reap more benefits. If tax collectors' discretionary power is restricted, the mutual benefits will be reduced, thus making it difficult for tax officials and taxpayers to build collusive relationships.

DO BUSINESS CHARACTERISTICS AND ECONOMIC FACTORS AFFECT EFFECTIVE TAX RATE? AN EVIDENCE FROM SOUTHEAST ASIA

The corporate tax burden is known to have a substantial impact on company management and the formation of national policy. One of the ways to measure the tax burden is by using effective tax rate (ETR). Prior research suggests that each region‘s characteristics may influence ETR within the region to varying degrees. Thus, the purpose of this study is to assess the impact of business characteristics and economic factors on ETR in Southeast Asia. There are 852 Southeast Asia companies used as samples in this study. The data is taken from S&P Capital over five periods from 2015-2019 and examined using a random effect regression model by STATA. The findings indicate that business characteristics and economic factors have a limited impact on ETR. By highlighting the factors that affect ETR in Southeast Asia, companies and policymakers can make better tax plans and policies.

ANALYSIS OF EFFECTIVE TAX RATE BASED ON IDX INDUSTRY CLASSIFICATION (IDX-IC) FOR COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE FOR 2019-2021

The aim of this research is to analyze related to the effective tax rate of companies for each classification sector based on the IDX-IC, to analyze the effect of the COVID-19 pandemic on corporate profits and tax burden, and to determine whether the factors used in this study have an influence on the effective tax rate of companies. A purposive sampling technique was used to determine the research sample, which consisted of companies listed on the Indonesia Stock Exchange classified based on the IDX-IC. The research approach used a mixed-methods approach. Based on the research, it was found that the average effective tax rate of the sample companies in 2019-2021 respectively, 26,87%, 24,51%, and 23,83%, with transportation and logistics sector have highest effective tax rate than other sectors. The COVID-19 pandemic has had varying impacts depending on the type of industry. Only the healthcare and infrastructure sector have performed better than other sectors during the COVID-19 pandemic. Apart from the COVID-19 pandemic variable, there are also group company variables used in researching the factors that affect the effective tax rate. Based on the research results, the COVID-19 pandemic variable has a positive effect on the effective tax rate. Meanwhile, group company variables have a negative effect on the effective tax rate. The influence of subsidiary company losses on consolidated profits causes the ratio of the effective tax rate to be smaller than the effective tax rate if it comes from the parent company.

The impact of the CEO’s green ecological experience on corporate green innovation—The moderating effect of corporate tax credit rating and tax burden

Using the data of listed companies in the Chinese capital market from 2014 to 2020, this paper studies the impact of the CEO’s green ecological experience on corporate green innovation and further analyzes the moderating effects of tax credit rating and tax burden. The results show that 1) the CEO’s green ecological experience can enhance corporate green innovation, 2) China’s tax credit rating positively moderates the impact of the CEO’s green ecological experience on corporate green innovation, and 3) corporate tax burden will negatively moderate the impact of the CEO’s green ecological experience on corporate green innovation.

Tax Burden and Corporate Investment Efficiency

Using A-share listed companies in Shanghai and Shenzhen from 2015 to 2021 as the research sample, a fixed-effects model was used to examine the effect of the reduction of corporate tax burden on investment efficiency under the tax reduction policy, as well as the role of tax avoidance and financing constraints in the mechanism. The results of the study show that the reduction of tax burden can effectively improve the efficiency of corporate investment, and this positive effect is reflected in the alleviation of corporate under-investment and discouragement of over-investment. The paper also analyses the mechanism through which tax burden affects the efficiency of corporate investment, and finds that tax reduction can discourage inefficient investment by reducing corporate tax avoidance and alleviating corporate financing constraints. In further analysis, it is found that the effect of tax cuts on investment efficiency is more significant in the sample of non-state enterprises, low corporate governance and low marketisation. The findings of the study support the positive significance of the current tax reduction policy. We provide a reference of tax reduction benefits to curb tax avoidance behavior, and provide a basis for relevant policy departments to further accelerate the implementation of tax reduction policies.