Effects Of Corporate Income Tax Research Articles

Non-Oil Revenue and the Impact on the Economic Development of Nigeria

Nigeria as one of the major oil-producing countries in the world has been diversifying into more non-oil revenue while more attention is paid to tax revenue as it has the potential of taking the country to the Promised Land. As a result, the study sought to examine Non-Oil Revenue and its impact on the Economic Development of Nigeria, leveraging on tax revenue for the period 1994–2023. The objectives of the study examined the effect of corporate income tax, capital gain tax, value-added tax, customs and excise duties on economic growth. Tertiary Education Tax, Stamp duty, and Other Levies were used as controlled variables. Data were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and Federal Inland Revenue (FIRS) Statistical Reports. ARDL Regression Analysis was applied to test the hypotheses. The findings revealed that the coefficients of variation for the lag values showed that the RGDP was positively impacted by TDT and CED, while negatively impacted by CIT, CGT, VAT, and SD. The ARDL model's R2 and Adjusted R2 statistics together explained almost 69% of the variation in RGDP, according to the adjusted R2 of 0.518719. This implies that a significant portion of volatility is still unaccounted for despite the model's poor predictive power. The study concluded that the aggregate tax revenue does not show the hope of taking the country to the promised land, as only two (CED and TDT) showed a positive relationship with the economic growth of the country. Thus, it recommended that the Nigerian government need to pay more attention to tax income since it can promote the necessary growth in the nation.

The employment effects of corporate income tax and the bargaining power of labor unions

This study analyzes how the relationship between corporate income tax and employment varies according to the bargaining power of labor unions. To this end, we use a dynamic general equilibrium model to examine corporate income tax and the bargaining power of labor unions based on a span-of-control model. Previous studies on the relationship between corporate income tax and employment are inconclusive and do not examine the role of the bargaining power of labor unions in this relationship. Calibrated results obtained using data from Korea show that a reduction in only the corporate income tax rate slightly decreases total employment, but a reduction in the corporate income tax rate accompanied by a decline in the bargaining power of labor unions significantly increases total employment.

법인세 인하가 기업 투자를 촉진하는가: 조세조정 토빈q 모형을 사용한 실증분석

This paper is to investigate the effect of corporate income tax on business investment by using panel data of Korean companies between 1983 and 2022. This paper estimates tax term in the tax-adjusted q model before and after economic crisis.
 The tax term estimation between 1983 and 1997 shows that the effect of corporate income tax rate on investment was strong before Korean financial crisis. Corporate income tax cut promoted significantly business investment. The estimation between 1998 and 2010 after Korean financial crisis shows that corporate income tax cut promoted moderately business investment. But the estimation between 2011 and 2022 shows that the effect of corporate income tax rate on investment is insignificantly small. Corporate income tax cut promote barely business investment after global financial crisis in 2008.
 Empirical results in this paper provide the new perspective on the corporate income tax policy. The Effect of the corporate income tax cut policy on business investment decreases rapidly as tax rate decreases and tax rate cut reduces the effect of tax incentive policy, such as investment tax credit and depreciation savings on investment.

Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia

PurposeThis study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.Design/methodology/approachThe study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.Findings(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.Research limitations/implicationsThis study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.Originality/valueThe findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

The effect of corporate income tax on financial performance: Evidence from Palestine

The purpose of this study is to investigate the corporate income tax effect on the financial performance of Palestinian firms. As Palestinian firms exist in an unstable situation and political risk with a fluctuating economy. It is worth studying to what extent the performance of these firms is affected by the corporate income tax (CIT) imposed by the Palestinian authority. This study is using panel data from 20 listed non-financial Palestinian firms during the period from 2016 to 2020. The random-effects model is used to empirically determine the effect of corporate income tax on financial performance after controlling for the most comprehensive macroeconomic factors, which have not been studied in the Palestinian context yet. This paper reveals a significant negative relationship between CIT and a firm’s performance. In contrast, the asset turnover ratio showed a significant positive relationship with financial performance. However, firm size is unrelated to financial performance, it shows up an insignificant relationship with the performance of Palestinian firms. This study proposes a further examination of the relationship between CIT and performance by extending empirical research on CIT performance determination using a different technique. This paper fulfills an identified need to study how an effective tax rate policy imposed in the Palestinian territory can sustain firms’ performance.

법인세의 분배효과에 관한 연구

This study analyzes the effect of corporate income tax on income distribution in Korea. Studies on the economic effects of corporate income tax have mainly focused on investment and employment effects. This research trend is due to the prevailing idea that the investment effect of corporate income tax is decisive, employment and wages are determined incidentally, and that companies are merely conduits for distributing profits to shareholders. However, corporate income tax also affects the labor income share and household income distribution through changes in employment and wages, dividends, and internal reserve fund of a company. If corporate income tax cuts increase investment, but employment growth is weak and real wage growth rates falls short of labor productivity growth rates, the labor income share will decrease and household income inequality will widen. According to the results of the empirical research, the effects of corporate income tax rate on investment and employment are weak. The expanded investment is also capital-intensive, so the employment effect is not significant, and more the real wage increase does not keep up with labor productivity. As a result, a reduction in the effective corporate income tax rate lowers the labor income share and increases income inequality. Therefore, to increase the distribution effect of corporate income tax, corporate income tax should be reformed in a way that supports employment growth and real wage increases while including investment.

The Effect of Corporate Income Tax on FDI Inflow in the Mining Sector in Tanzania

Purpose: Tanzania is one of the mineral-rich countries giving corporate income tax (CIT) concessions to encourage foreign direct investment (FDI). Tanzania's mining industry remains enticing to investors, owing to its expanding diversity. This paper assesses the impact of corporate income tax in the mining sector for the period of 1990 – 2020. The paper also sought to analyse the impact of other determinants of FDI namely, Political stability, Human capital and infrastructure on FDI inflow in the mining sector.
 Methodology: The study utilized secondary annual time series data collected from the World Bank (WB), Bank of Tanzania (BOT), and Foundation for Studies and Research on International Development (FERDI). The Autoregressive Distribution of Lags (Ardl) estimating approach was used to analyse the short-run and long-run relationship between FDI and corporate income tax as well as the aforementioned variables.
 Findings: A negative relationship between corporate income Tax and FDI inflow in the mining sector was confirmed. Thus, portraying both short-run and long-run effects of corporate income tax on FDI inflow in the mining sector.
 Unique Contribution to Theory, Practice and Policy: To encourage and increase FDI inflow in the mining sector, the government of Tanzania requires concerted efforts with relevant authorities that will ensure a fair moderation of corporate income Tax which will in turn increase tax compliance. The concerted efforts carter for factors linked with FDI inflow such as corporate income tax, political stability, human capital quality, and infrastructure. These factors align concurrently with the eclectic paradigm which is the anchoring theory of the study.
 

Productivity effects of corporate income tax: Evidence from China

AbstractWith a persistent global economic slump, governments encourage economic growth by expansionary fiscal policies through tax cuts. Total factor productivity (TFP) is an important determinant of corporate development and economic growth. Taking China's 2008 Corporate Income Tax Reform as a quasi‐natural experiment, this paper uses data from China's A‐share listed companies from 2003 to 2018 and difference‐in‐differences analyses to identify the impact of corporate income tax (CIT) rate changes on TFP. The findings indicate that reducing the CIT rate positively impacts corporate TFP through two available channels: corporate investment and human capital investment. Additionally, the effects of reducing the CIT rate on TFP are primarily significant in non‐state‐owned, smaller and more financing‐constrained enterprises.

The Effect of Corporate Income Tax on Investment in Japan

The purpose of this research is to analyse and examine the effect of corporate income tax on the investment in Japan from 1987 to 2016. It is an associative-causal research. The secondary data are taken form International Monetary Fund, International Financial Statistics and data files using World Bank. The hypotheses were tested by using the multiple linear regression analysis. The results of this research showed that, simultaneously, corporate income tax rate and interest rate have highly significant effect on investment. After the research is conducted and it was analysed with partial test, corporate income tax rate negatively affects investment in Japan. It is highly recommended that Japan government should reduce the corporate income tax on companies so that there will be more investment in Japan.
 JEL Classification: E22, H32

Tax evasion and optimal corporate income tax rates in a growing economy

AbstractWe explore how tax evasion by firms affects the growth- and welfare-maximizing rates of corporate income tax (CIT) in an endogenous growth model with productive public service. We show that the negative effect of CIT on growth is mitigated in the presence of tax evasion. This increases the benefit of raising the CIT rate for public service provision. Thus, in contrast to Barro [(1990)Journal of Political Economy98, 103–125], the optimal tax rate is higher than the output elasticity of public service. Through numerical exercises, we demonstrate that the role of tax evasion by firms is quantitatively significant.

An Analysis of the Effects of Taxation on Income Inequalities in WAEMU

This article analyses the potential effect that tax instruments have on income inequalities in sub-Saharan Africa particularly in the West African Economic and Monetary Union (WAEMU). Tax instruments are represented by various types of levies and taxes whereas income inequalities are estimated by the Gini index. Using the generalised method of moments over the period from 1990 to 2017, the results demonstrate that value-added tax, excise duties, and port charges have no effect on income inequalities whereas personal income tax and corporate income tax improve income distribution in the WAEMU. However, the globalisation of economies reverses the effect of corporate income tax. Moreover, tax progressivity reduces inequalities while the tax structure has no significant effect on income inequalities. To this end, the study recommends using direct and progressive tax instruments for the fight against inequalities. Similarly, the fight against aggressive tax optimisation must take a central stage in tax policies within an economy that is increasingly open to multinational companies.

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.

The Effect of Corporate Income Tax of Agricultural Companies on National Budget ? the Case of the Slovak Republic

The Effect of Corporate Income Tax of Agricultural Companies on National Budget ? the Case of the Slovak Republic

Effect of corporate income tax on investment decisions of Indian manufacturing firms

This study is an attempt to empirically analyse the effect of corporate income tax on investment of manufacturing firms in India during 2005–2019, using the standard static panel model estimation techniques. It is found that the effective corporate tax rate has a negative and significant impact on the corporate investment. Moreover, the estimated effective tax elasticity is relatively low as compared to the magnitude found in other countries. The adverse impact of tax on investment is higher in private firms than in public firms and higher in pre-economic crisis period than in post-crisis period. The effective rate increases with age and size of firms. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it will not hinder business investment in India.

Missing social security contributions: the role of contribution rate and corporate income tax rate

Social security compliance by firms is critical to the welfare of workers and the sustainability of the program. Partly because of weak law enforcement, social security evasion—failure to participate or only partially pay the contributions—is severe in developing countries. In this study, we examine how social security evasion by firms is determined by two policy parameters: social security contribution rate and corporate income tax rate. Using a novel longitudinal dataset of firms in China, we exploit city-by-year variations in social security contribution rate and variations in corporate income tax rate generated by a 2008 corporate tax reform. Findings suggest that the two policy parameters have opposite effects on social security evasion, namely social security contribution rate has a positive effect on evasion, and corporate income tax rate has a negative effect. The negative effect of corporate income tax is as expected because a high corporate tax rate reduces the effective costs of social security contributions, which are deductible. The estimated effects of the policy parameters are pronounced among private-owned domestic firms and firms in cities where a formal labor contract is less common. Findings suggest that corporate tax rate can be used as a companion policy instrument with social security contribution rate to combat social security evasion in developing countries.

International effects of corporate tax cuts on income distribution

AbstractThis paper evaluates the domestic and cross‐country effects of corporate income tax (CIT) cuts on income inequality using a tractable multi‐country DSGE model calibrated to U.S. and Canadian data. We illustrate that the cross‐border propagation of differentiated equity holdings can help explain the increase in income inequality, both within‐ and cross‐country, in response to a CIT cut. A lower barrier to capital mobility alleviates this divergence in income, while lower trade costs exert little effects on income distribution. The model is also consistent with recent evidence that middle‐income workers experience lower income growth than their counterparts in either extreme of the skill spectrum.

A Theory of the Effect of Corporate Income Tax on the Optimal

Most professional and public discussions of the reduction of the corporate income tax rate in the United States (enacted in year 2017) focus on its income-distributive effects. This article addresses the question how, if at all, the change in the tax rate can be expected to affect a firm’s decision with respect to its optimal output and consequent deployment of factor inputs. The theory developed in this article assumes the firm faces an uncertain demand function embodying an additive random variable. The article derives three propositions relating the change in the tax rate and the firm’s output to the firm’s attitude towards risk.

Effect of Corporate Income Tax Incentives on Investment in Rwanda

The purpose of this study was to establish the effect of corporate income tax incentives on investment using privatesector manufacturing companies in Kigali special economic zone, Rwanda. The study adopted descriptive researchdesign and the study population comprised of thirty-nine manufacturing companies in free zone in Rwanda which areregistered by the private sector. The sample size comprised of 36 private companies determined from a totalpopulation of 39 companies. Only two employees that are acquainted with decision making from each manufacturingcompanies registered by the private sector were targeted hence the target population respondents was 72 respondents.The Stratified random sampling technique was used to select the respondents. Data was collected from both primaryand secondary data using questionnaires and documentation. The findings in the study revealed that tax incentiveshave significant positive effect on investment in private sector manufacturing companies in Rwanda. The p -valuesfor all the variables are lower than 5% this implies that are significant. From the study the p-values are 0.009, 0.000,0.003 and 0.000 for company income tax, capital allowance, value added tax and capital gains tax incentivesrespectively. The capital allowance incentive has the highest t value of 4.656, followed by company income taxincentives with 3.954, and next is capital gains tax incentives with 3.184, while the lowest is the value added taxincentives with 2.954. Based on the empirical evidences and results of the analysis, there is positive and statisticallysignificant relationship between the tax incentives and investments. The study recommends that Government andpolicy makers should concentrate on efforts at ensuring that more CIT incentives and strategies that are specificallyaddressing small and medium enterprises are introduced.

Who Bears the Corporate Tax Incidence? Empirical Evidence from India

Against the backdrop of corporate tax policy changes in India, the paper attempts to measure the incidence of corporate income tax in India under a general equilibrium setting. Using seemingly unrelated regression coefficients and dynamic panel estimates, we tried to analyze both the relative burden of corporate tax borne by capital and labor and the efficiency effects of corporate income tax. The data for the study is compiled from corporate firms listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) for the period 2000–15. Our empirical estimates suggest that in India capital bears more of the burden of corporate taxes than labor. However, the results vary with different proxies of capital used in the models. Though it is contrary to the Harberger (1962) hypothesis that the burden of corporate tax is shifted to labor rather than capital, it confirms the existing empirical results in the context of India.

Corporate Tax Incidence in India

The paper attempts to measure the incidence of corporate income tax in India under a general equilibrium setting. Using seemingly uncorrelated regression coefficients and dynamic panel estimates, we tried to analyze both the relative burden of corporate tax borne by capital and labor and the efficiency effects of corporate income tax. The data for the study is compiled from corporate firms listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) for the period 2000-15. Our empirical estimates suggest that in India capital bears more of the burden of corporate taxes than labor. Though it is contrary to the Harberger (1962) hypothesis that the burden of corporate tax is shifted to labor rather than capital, it confirms the existing empirical results in the context of India.