Effect Of Tax Incentives Research Articles

Effect of Tax Incentives on Non-Oil Tax Revenue: Econometric Case Study from Nigeria (1981-2022)

The non-oil tax income in Nigeria is low and contributes less than 10% of the GDP. Also, non-oil export in Nigeria contributes less than 15% to the GDP reflecting an abysmal performance over the years. This study therefore empirically examined the effect of tax incentives on non-oil tax revenue in Nigeria from 1981-2022. Tax incentives was measured by export expansion grant while non-oil tax revenue was measured by total tax revenue, non-oil export, tax rate and real effective exchange rate. Unit root test was conducted using Augmented Dickey Fuller (ADF), Phillip Perron statistics and Kwiatkowski-Phillips-Schmidt-Shin test statistic and it was found that the variables are not in the same order of integration. Bound test result indicated long run significant relationship within the variables. Autoregressive Distributive Lag Model (ARDL) found that Export expansion grant had short run significant negative effect on non-oil tax revenue in Nigeria (β9 = -0.07, p-value = 0.0299 < 0.05) but had an insignificant positive effect in the long run (α8 = 1.29, p-value = 0.3738 > 0.05). Tax rate had positive significant effect on non-oil tax revenue in the short run (β3 = 0.01, p-value = 0.0027 < 0.05). However, in the long run, tax rate had negative insignificant effect on non-oil tax revenue (α2 = -0.28, p-value = 0.4822 > 0.05). the study concluded that export incentives have become a drain to government resources over the years. Based on the result, we recommended that export expansion grant processing time frame and payment should be improved.

Effect of Simplicity of the Tax System on Income Tax Collection among Small and Medium Enterprises in Kamukuji Sub-County Nairobi, Kenya

Purpose: Taxation is how government finances its expenditure by imposing charges on citizens and corporate entities. A country’s tax regime is always a key factor for any business considering moving into new markets. The purpose of this study was to establish the effect of Simplicity of the tax system on income tax collection among small and medium enterprises in Kamukunji Nairobi County, Kenya. The theories that guided this study were Ability-to-Pay Theory of Taxation, and, Unified Theory of Acceptance and Use of Technology. Methods: The study adopted an explanatory research design. The target population was 3106 small and medium enterprises in Kamukunji Nairobi County. A sample size of 354 respondents was drawn from this population using Yamane’s formula. In this study, out of 354 targeted respondents, 283 questionnaires were correctly filled and returned, resulting in a response rate of 79.94%. Results: The study found that Simplicity had a positive and significant effect on income tax collection (β = 0.236, p = 0.000). Conclusion: The study recommends that the government should focus on simplifying tax procedures and forms to reduce administrative complexity. This can increase voluntary compliance by making the tax process more accessible, particularly for SMEs that may lack sophisticated accounting knowledge. Future research should Investigate the effect of tax incentives, on companies’ financial performance.

Effectiveness of Corporate Tax Incentives in Attracting Investments

Corporate tax incentives are widely used by developing nations to attract investments, stimulate economic activity, and drive industrial growth. This study investigates the effectiveness of these incentives in achieving their intended goals by analysing macroeconomic data from a diverse sample of developing economies over the past two decades. The research focuses on the relationship between tax policies and key investment indicators such as foreign direct investment (FDI), domestic capital formation, and economic growth metrics like GDP, employment, and productivity. Using a combination of panel data regression and time-series econometric techniques, the study identifies critical factors that mediate the success of tax incentives, including the quality of governance, infrastructure development, and ease of doing business. Preliminary findings suggest that while corporate tax incentives are effective in attracting short-term investments, their long-term impact on economic growth is contingent on broader economic and institutional frameworks. The analysis also highlights potential trade-offs, such as revenue loss and inequality, stemming from poorly designed tax policies. This paper contributes to the literature by providing empirical evidence on the conditional effectiveness of tax incentives and offering actionable policy recommendations. The findings aim to assist policymakers in designing balanced tax regimes that promote sustainable economic growth without undermining fiscal stability.

Effect Of Tax Incentives On The Performance Of Manufacturing Firms In Nairobi County, Kenya

Over the last few decades, the contributions of the firms on the performance of the largest economies in the world have beamed the searchlight on the uniqueness of the manufacturing firms; and this has succeeded in overruling previously held views that firms were only smaller versions of larger companies. Since the 1960s to date, manufacturing firms have been given due recognitions especially in the developed nations for playing very important roles towards fostering accelerated economic performance, development and stability within several economies. Manufacturing firms in Kenya face challenges with regard to financing, disproportionate regulatory burdens and competition failures compared to large entities. The main objective of this study was to determine the effect of tax incentives on performance of manufacturing firms in Kenya. The specific objectives were to establish the effect of investment allowances, excise duty incentive and customs incentive on performance of manufacturing firms in Kenya. The study was guided by the, Normative Theory, Political System Theory and the resource-based view. This study was focused on the 150 large manufacturing firms in Nairobi County. The study employed explanatory research design. Both descriptive and inferential statistics for the data obtained was analyzed. The descriptive statistics was done using Statistical Package for Social Sciences (SPSS) and was presented by means, standard deviation and frequency tables. A regression model was used to evaluate the relationship between the dependent and independent variables of the study. The regression analysis revealed that investment allowances (B = 0.262, p = 0.000), excise duty incentives (B = 0.311, p = 0.000), and customs incentives (B = 0.089, p = 0.037) all have positive and significant relationships with the performance of manufacturing firms. The study concludes that investment allowances, excise duty incentives, and customs incentives significantly and positively influence the performance of manufacturing firms, highlighting the critical role of fiscal incentives in driving industrial growth and development. The study recommends maintaining and enhancing Investment allowances, Excise Duty Incentives, and Customs Incentives to support manufacturing firms in Nairobi County, Kenya, as these incentives have shown significant positive effects on firm performance. Additionally, policymakers should prioritize clear communication and accessibility of these incentives while tailoring them to address specific industry needs, ensuring that manufacturing firms can readily access and benefit from them, ultimately fostering economic growth and development in the region

The Effect of Tax Incentives, Tax Socialization, and Taxpayer Understanding on Annual Tax Return Reporting in Sampit City

This study aims to determine the influence of tax incentives, tax socialization, and taxpayer understanding on the reporting of Annual Tax Returns in Sampit City. The sample of this study is Taxpayers in Sampit City, Central Kalimantan with 300 respondents. The purposive sampling method is used related to sample selection. The type of quantitative data is used in this study. The results of this research are that there is no significant influence of tax incentives on the reporting of the Annual Tax Return, but tax socialization, and taxpayer understanding have an effect on the reporting of the Annual Tax Return, which means that the existence of tax incentives does not have a significant effect on increasing compliance in reporting the Annual Tax Return, while tax socialization, and taxpayer understanding have a significant effect on increasing compliance in reporting the Annual Tax Return. In conclusion, the implementation of tax incentive policies does not have a positive effect on the reporting of Annual Tax Returns. In this study, no significant positive influence was found between tax incentive policies on MSME Annual Tax Return Reporting. Although all respondents are taxpayers who have reported the Annual Tax Return and some answered that they are aware of the tax incentives, they generally still pay taxes according to the amount of tax they usually pay in the previous months.

Enhanced R&D Tax Deduction and Corporate Short-term Loans for Long-term Investment: Evidence from China

This study empirically investigates the effect of tax incentives on enterprises’ reliance on short-term loans for long-term investment, focusing on China’s enhanced R&D tax deduction policy in 2015. By employing a regression discontinuity design and a complementary difference-in-differences specification, we find that the policy led to a notable reduction in enterprises’ resorting to short-term loans for long-term investment. In addition, the policy accomplished its effect by augmenting enterprises’ cash flows and mitigating their financing constraints, which increased their tendency to rely on internal financing for long-term investment. Furthermore, the policy exhibits a more pronounced restraining effect on financially healthy, non-state-owned, innovative, and small-scale enterprises. The study sheds light on the impact of tax incentives on enterprises’ financing decisions for long-term investment and has important policy implications.

Effect of Integrated Customs Management Systems (ICMS) on Customs Duty Performance in Nairobi County, Kenya

Purpose: Tax is an important stream of revenue for government’s development projects and therefore all efforts must be made by governments to ensure that it is accurately and efficiently collected to facilitate the government’s operations. This study sought to determine the of integrated customs management system on factors affecting customs duty performance Nairobi County, Kenya. The theories supporting the study is comparative theory of international trade. Methodology: The study employed explanatory research design. The target population of this study was 438 respondents comprising customs heads of departments, customs officers and customs agents at Embakasi Inland Depot, Nairobi. with a sample size of 209, out of which 173 respondents correctly filled the questionnaires and submitted them accordingly. The data collected was analyzed through descriptive and inferential statistics. A linear regression model was used. Results: The coefficient study showed that a unit change in ICMS increases customs duty performance significantly β =0.205 p-value =0.000<0.05. Conclusion: The study recommends that the KRA and the government of Kenya prioritize the continuous improvement of the Integrated Customs Management System (ICMS). Customs management should ensure full utilization of the ICMS by training customs officials and stakeholders, given its positive impact on duty performance. Future research may be carried out on the effects of tax incentives on Customs duty performance

Sociological Behaviour and Excise Duty Compliance Nexus: Do Dispute Resolution Mechanisms Matter? Evidence From Alcoholic Beverage Manufacturers in Kenya

Purpose: Despite implementation of several initiatives to improve tax revenue collections, actual tax revenues have fallen short of projected targets. The purpose of the study was to determine the moderating role of dispute resolution mechanisms on the relationship between sociological behaviour and excise duty compliance among alcoholic beverage manufacturers in Nairobi County, Kenya. The study was guided by the theory of planned behaviour and judicial organization and adjective law theory. Methodology: The study employed explanatory research design. The target population of the study was 231 respondents. Primary data was collected through structured questionnaires. Out of 231 issued questionnaires, 185 filled and returned the questionnaires. Results: The study found that sociological behavior had a positive and significant effect on excise duty compliance, β=0.270 and p-value=0.000124<0.05. The study also found that dispute resolution mechanisms moderate and enhance the positive effect of sociological behaviour on excise duty compliance, β=0.113 and p-value of 0.000000<0.05. Conclusion: It is recommended that policymakers should consider and incorporate the theory of planned behaviour into tax compliance frameworks since understanding how sociological behaviour influences tax compliance can inform the development of targeted interventions and policies. It is also recommended that effective and affordable dispute resolution mechanisms should be put in place as they provide clarity and ultimately result in resolution of conflicts arising on account of excise duty thus promoting excise duty compliance. Future studies should be conducted on the effect of tax incentives on excise duty compliance.

The Impact of Tax Incentives on the Growth of Small and Medium-Sized Enterprises: A Comparative Study Based on Industry

Tax incentive policies have been widely used as a crucial tool to promote the development of Small and Medium-sized Enterprises (SMEs), but their effectiveness varies across different industries and policy types. This study utilizes a comprehensive panel dataset from 2015 to 2023 to investigate the impact of Value-Added Tax (VAT) and income tax incentives on the growth of SMEs in China. Through fixed effects model analysis, we find that both VAT and income tax incentives significantly enhance SMEs' sales revenue and total asset growth. However, the magnitude of these effects differs substantially across industries, with high-tech and information technology service industries benefiting the most. Our industry comparison analysis reveals that the effectiveness of tax incentives is closely related to industry-specific characteristics, such as research and development (R&D) intensity and capital requirements. These findings provide key empirical evidence for optimizing SME tax policies and suggest that a more nuanced, industry-specific approach to tax incentives is needed. This study not only contributes to the literature on SME growth and tax policy effectiveness but also offers important insights for policymakers to refine SME support systems in the context of rapid technological change and economic transformation.

The green bonus of tax incentives: Evidence from China

Using a novel dataset covering over one million firm-level energy consumption entries from 2007-2016, we employ a difference-in-differences approach to estimate the causal effect of tax incentives on carbon emission intensity by exploiting China’s staggered implementation of accelerated depreciation policies for fixed assets in 2014 and 2015. We find that the accelerated depreciation policy leads to a significant 9.19% reduction in carbon emission intensity, equivalent to 0.11 tons of carbon emissions per 10,000 RMB of industrial value added. The policy effect is more pronounced for large firms, those with medium-term assets, and in regions with greater market integration and industrial agglomeration. Our firm-level analysis reveals that the policy reduces energy consumption, promotes a shift towards a cleaner energy portfolio and increases R&D investments in abatement technologies, as well as climate-friendly innovations. The above results show high consistency with verification at the aggregation level using satellite-based observations. Our findings highlight the potential of well-designed fiscal policies to contribute to global climate action efforts in developing economies.

Impact of Fiscal Policy on Corporate Innovation in an Emerging Market Economy: Evidence from Brazil

This study investigates the impact of fiscal policy on corporate innovation in an emerging market economy, focusing on Brazil. Utilizing a comprehensive dataset of firms listed on the B3 Brazilian Stock Exchange from 2010 to 2020, we employ panel data analysis and the difference-in-differences (DiD) method to examine the effects of tax incentives, government subsidies, and public investment in innovation infrastructure on corporate innovation activities. Our findings reveal that tax incentives significantly enhance innovation outputs by reducing the financial burden of R&D investments. Similarly, government subsidies are shown to lower the cost and risk associated with R&D projects, thereby fostering greater innovation. Furthermore, public investment in innovation infrastructure plays a crucial role in creating an enabling environment for corporate innovation. These results provide robust evidence supporting the effectiveness of fiscal policy in promoting innovation in emerging markets, offering valuable insights for policymakers aiming to foster sustainable economic growth and competitiveness.

Effects of SUDENE’s tax incentives on job creation in the Northeast region of Brazil

ABSTRACT This paper analyzes the effects of tax incentives on job creation by companies located in the Northeast region of Brazil, disaggregated by sector. The generalized synthetic control method is employed to handle this problem. The evidence indicates that the incentives have beneficial effects on increasing firm employment. Specifically, we observed positive impacts in the labour-intensive manufacturing sector. Therefore, the results provide positive evidence for using tax incentives for regional development, although the effects are concentrated in the manufacturing sector.

Effectiveness of tax incentives in optimizing corporate income tax revenue: Case study public listed company tax office

Tax revenue is a key component of the Indonesian State Budget (APBN) and plays a strategic role in national development. This study aims to analyze the impact of the implementation of the income tax rate reduction policy and tax incentives based on Law Number 7 of 2021 on Harmonization of Tax Regulations (UU HPP) on corporate income tax revenue at Public Listed Company Tax Office. The research methodology used is qualitative descriptive, with primary data obtained through interviews with tax officials and tax consultants, and secondary data from tax revenue documentation and related literature. The findings show that the reduction in corporate income tax rates and the provision of tax incentives for publicly listed companies significantly impact the optimization of tax revenue at the Public Listed Company Tax Office. The largest contribution to corporate income tax revenue comes from companies listed on the Indonesia Stock Exchange (IDX), with a dominant contribution from companies conducting Initial Public Offerings (IPOs). The study also identifies several factors affecting the optimization of corporate income tax revenue, including tax awareness and corporate tax morale. These findings provide important insights into how tax policies can be optimized to improve taxpayer compliance and tax revenue, as well as their contribution to national economic growth.

The Tax State: An Outdated Concept

Taxes are compulsory levies for no consideration. Because there is no earmarking, the budget funds are often not spent effectively by the state authorities. In economic terms, the incentive effects of taxes and deadweight losses are counterproductive. The alternative would be state financing that is primarily based on performance and consideration (equivalence). A key component of this would be marginal cost-oriented charges. A second element would be the financing of provisioning costs of public infrastructure from land rents. This would largely avoid the problems of tax financing. States and public companies can be observed that are already successfully moving in this direction.

Effect of Tax Incentive on Compliance in Nigeria of Listed Food and Beverages Firms in Nigeria

This study investigates the impact of tax incentives, specifically rural investment allowances and pioneer status, on compliance among listed food and beverage firms in Nigeria. Using regression analysis, we found that rural investment allowances significantly enhance compliance, explaining 97.8% of the variance, while pioneer status shows a non-significant impact. The findings highlight the importance of targeted tax incentives in promoting regulatory adherence and economic development. Recommendations include enhancing rural investment allowance programs, leveraging incentives for operational efficiency, and reevaluating the pioneer status framework to ensure effectiveness in encouraging compliance and investment. These insights offer valuable guidance for policymakers and businesses.

The Effect of Tax Incentives, Tax Socialization, and Law Enforcement on Motor Vehicle Tax Compliance in East Java

This study examines the impact of tax incentives, tax socialization, and law enforcement on motor vehicle tax compliance in East Java, utilizing a quantitative approach. A sample of 140 respondents was surveyed using a Likert scale (1-5), and the data were analyzed with Structural Equation Modeling-Partial Least Squares (SEM-PLS 3). The results indicate that tax incentives (H1), tax socialization (H2), and law enforcement (H3) have positive and significant effects on motor vehicle tax compliance. Specifically, law enforcement emerged as the most influential factor, followed by tax incentives and tax socialization. These findings highlight the importance of well-structured tax policies, comprehensive taxpayer education, and robust enforcement mechanisms in enhancing tax compliance. The study offers valuable insights for policymakers seeking to improve tax collection efficiency and compliance rates among motor vehicle owners in East Java.

The Effect of Tax Incentives on the Performance of Specialized and Sophisticated Small and Medium-Sized Enterprises: The Role of Innovation

Tax incentives have been widely used to promote the development of enterprises, especially Specialized and Sophisticated enterprises in Chian. This research endeavors to examine the effects of tax incentives by amalgamating established theoretical frameworks and empirical data, while taking into account the attributes of specialized and sophisticated SMEs. Innovation, serving as a fundamental driver of contemporary economic, technological, and social development, exhibits diverse definitions across various academic fields. This research attempts to explain the direct and indirect ways in which tax incentives influence enterprise performance through examining the relationship between tax incentives, innovation input and output, and enterprise performance. To achieve this, the research uses a multiple linear regression model to test the direct effect of tax incentives on the performance of specialized and sophisticated SMEs. Additionally, a three-step method based on Baron and Kenny (1986) is used to test the mediating role of innovation input between tax incentives and enterprise performance. Furthermore, hierarchical regression is applied to assess the moderating effect of innovation output on the relationship between tax incentives and enterprise performance. The empirical analysis in this article confirms that all hypotheses are valid.

The Effect of Tax Incentives, Tax Rates, Tax Sanctions, Tax Services, and the Application of SAK EMKM on the Compliance of UMKM Taxpayers during the COVID-19 Pandemic: A Case Study of UMKM Taxpayers Registered at KPP Pratama Ternate

The Effect of Tax Incentives, Tax Rates, Tax Sanctions, Tax Services, and the Application of SAK EMKM on the Compliance of UMKM Taxpayers during the COVID-19 Pandemic: A Case Study of UMKM Taxpayers Registered at KPP Pratama Ternate

Tax Incentives, Confidence, and Enterprise Innovation in Chinese Listed Companies

ABSTRACT In this paper, we study the direct effect of tax incentives on enterprise innovation investment and the mediating effect of confidence on enterprise innovation investment using data from 3,900 annual reports of listed companies in China from 2008 to 2020 for data mining, and combine this with sentiment analysis to measure the business confidence index. We find that tax incentives are significantly and positively related to enterprise innovation investment and tax incentives are significantly and positively related to business confidence. Business confidence plays a significant partial mediating role between tax incentives and enterprise innovation investment, and tax incentives boost confidence by alleviating internal financing constraints. This study provides empirical evidence to help the government develop strategies to activate the confidence of market players and boost market expectations.

PENGGUNAAN MODEL EKONOMETRIKA UNTUK MENENTUKAN INSENTIF PERPAJAKAN BAGI INVESTOR DAN PENGARUHNYA BAGI INVESTASI

This research aims to determine the effect of tax incentives for investors to invest their capital in Indonesia and calculate how many tax incentives can be given to investors. Methodology, The method used is a literature review using multiple linear analysis econometric models. Meanwhile, to test the correlation between incentives and investment in the textile sector in 2020-2021. Results, the of multiple econometric model calculations with existing data, the tax incentive amount is 73.7, with an unpredictable random error (?). Meanwhile, from the correlation test, it was found that tax incentives do not affect investment in the textile industry sector.