Impact Of Tax Incentives Research Articles

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.

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.

ANALYSING THE IMPACT OF TAX INCENTIVES ON SAVINGS AND INVESTMENTS

Tax incentives have a significant impact on how people save and invest. The goal of this study is to look into the impact of tax incentives on saving and investing. This study tries to provide insights into how tax incentives influence behavior. The study aims to examine the effects of tax incentives on savings and investment habits among respondents. The study also sets up some hypothesis about the impact of tax incentives. The study primarily uses primary data, i.e., a questionnaire. The data will be tested by chi-square tests, regression, and frequency using the statistical software SPSS. The study received approximately 110 responses. The study addressed the debated effects of tax incentives on individuals' behavior, the effectiveness of incentive structures, and overall economic outcomes. The study found that tax incentives significantly impact savings habits, investment portfolio checks, and awareness among respondents. The study also found that the hypothesis being tested was that tax incentives have an impact on savings and investments.

International tax incentives, cross-border research and development, and corporate innovation performance

Based on a sample of multinational firms from 2012 to 2022, this study uses empirical models to examine the impact of R&D tax incentives on corporate innovation. We find that tax incentives can greatly enhance a firm's R&D expenditures. However, innovation performance is not significantly improved. The results suggest firms merely transfer their R&D activities from countries with low tax subsidies to countries with high tax subsidies, and the real effect of tax incentives on boosting innovation is limited. This study provides valuable insights to practitioners by shedding light on the impact of tax incentives on innovation outcomes.

The Government's fiscal and taxation policy effect on enterprise productivity: Policy choice and optimal allocation

Based on a thorough exploration of the mechanisms by which fiscal subsidies and tax incentives influence enterprise productivity, this research conducts an empirical analysis, leveraging a detailed micro-database of Chinese industrial enterprises spanning from 1998 to 2012, and applies a fixed-effect methodology to rigorously evaluate the effects of these fiscal and tax policies. The findings of this research indicate that: (1) On average, both fiscal subsidies and tax incentives help to increase the productivity of Chinese enterprises. Regarding the impact of individual policies, it is discerned that the stimulative influence of tax incentives surpasses that of fiscal subsidies in terms of promoting enterprise productivity. This conclusion is still valid after the robustness test. (2) By examining the heterogeneous characteristics of the city's administrative hierarchy, industry factor intensity, and enterprise ownership, it is found that the “productivity effect” of fiscal subsidies in municipalities is the largest, and the “productivity effect” of tax incentives in prefecture-level cities is the largest. The productivity of capital and labor-intensive enterprises benefits most from fiscal subsidies. There is little difference in the impact of tax incentives on the productivity of enterprises across various industries. Considering the aspect of enterprise ownership, it is observed that private enterprises leverage fiscal subsidies and tax incentives more effectively than state-owned enterprises to enhance their productivity. (3) There are synergy effects between fiscal subsidies and tax incentives in promoting enterprise productivity. The government can maximize corporate productivity by allocating tax incentives and fiscal subsidies at a ratio of 3.12:1.

An empirical study on the impact of tax incentives on technological innovation in energy conservation and environmental protection industry

An empirical study on the impact of tax incentives on technological innovation in energy conservation and environmental protection industry

Contribution of Tax Induced Foreign Direct Investment for Sustainable Development in Bangladesh

Tax incentives play a crucial role in promoting and facilitating foreign direct investment (FDI), thereby contributing to a country's overall economic development. However, Bangladesh experienced a decline in FDI-based foreign income in the first two quarters of 2018, partially attributed to a lag in FDI from the USA. Given Bangladesh's historical challenges with deficit financing post-independence, increasing self-revenue income and leveraging tax-induced FDI are imperative for achieving sustainable development goals. To develop tax incentive-based hypotheses, four investment climate factors are considered: i) Corporate Tax Rate (CTR), ii) Tax Holiday (TaxH), and iii) Tax Concession (TaxC). This research adopts an analytical and descriptive approach, employing a mixed-method research methodology to analyze data sourced from both primary and secondary sources. Data collection methods include semi-structured interviews and documentary analysis, focusing on regulatory bodies like NBR, BIDA, and BOI for tax incentive analysis, and relevant organizations such as BB, World Bank, UNCTAD, BIDS, FIAS, BEZA, and BEPZA for FDI-related documents. The impact of tax incentives on FDI inflows in Bangladesh from 2001 to 2020 is analyzed using a simple regression model. The independent variables include corporate tax rate, tax holiday, and tax concession, while controlled variables such as gross domestic product (GDP) and corruption are also considered, as they may influence FDI inflows. Statistical analysis reveals a negative influence of corporate tax rate on FDI inflows, while the tax holiday variable exhibits a positive and statistically significant relationship with FDI inflows. Furthermore, alongside the contribution of FDI, this study also examines sustainable development trends from 2016 to 2020, providing numerical insights into its attainment. Overall, this research sheds light on the importance of tax incentives in attracting FDI and its implications for sustainable development in Bangladesh.

Research on the impact of tax incentives on enterprise innovation activities: Based on the life cycle of enterprises

Research on the impact of tax incentives on enterprise innovation activities: Based on the life cycle of enterprises

The impact of tax incentives on value-added agricultural exports: Empirical evidence from Zimbabwe

The impact of tax incentives on value-added agricultural exports: Empirical evidence from Zimbabwe

Effects of Tax Incentives on Financial Performance of Manufacturing Firms in Nyeri County

Purpose: The main objective of this study was to ascertain how tax incentives affected the financial performance of manufacturing firms in Nyeri County. The study's goal was to look into the impact of tax incentives, corporate income tax incentives, capital allowance incentives, and custom duty incentives on the financial performance of manufacturing firms in Nyeri County.
 Methodology: The study adopted a descriptive research design. The population for the study comprised of all the 15 manufacturing firms in Nyeri County that were registered by Nyeri County finance department; licensing office 2023. The target population's information was gathered using census methodologies. The data was gathered using questionnaires with likert scales to capture the primary data. The questionnaires were split into two sections that captured the demographic information in the first part, and the second part capturing data on the study variables. The study collected secondary data from the audited annual financial reports for the targeted manufacturers and the internal sources for a six-year period, focusing on the specific variables under investigation. Drop and pick method was used to distribute the questionnaire to the participants. Descriptive statistics including the mean, standard deviation, and frequency were used to analyse the data.
 Findings: The study findings established that there exists a significant relationship between capital allowance and the financial performance of manufacturing firms in Nyeri County. Capital Allowance emerged as the most crucial predictor of Financial Performance (Beta = 0.766), followed by Custom Duty Incentive (Beta = 0.498) and Tax Holiday (Beta = 0.359). On the other hand, Corporate Income Tax Incentive had the least effect (Beta = 0.323) on the financial performance of these firms. Participants expressed a positive perception regarding the influence of capital allowances on their respective firms' financial performance, with strong agreement on investment deductions, wear and tear allowance, capital allowance incentives, and overall satisfaction with the current level of capital allowances. The study concluded that customs duty incentives positively affect the financial performance of manufacturers in Nyeri County.
 Unique Contribution to Theory, Practice and Policy: It recommends revisiting customs duty tax policies to gain industry support. Strategic custom duty incentives aligned with economic goals can boost industrial enterprises and stimulate growth. Tax holiday incentives have the potential to increase employment and profitability, encouraging investment and job creation. Corporate income tax incentives were found to enhance manufacturing firms' financial performance, suggesting their prioritization and offering additional incentives, like reduced tax rates, to foster growth. The study suggested further research to explore factors beyond tax incentives that influence the financial performance of manufacturing firms. Additionally, the research recommended conducting similar studies in sectors other than manufacturing to assess the effects of these tax incentives across different businesses. This comparison could help identify the most suitable incentives for each organization.

СОЛИҚ ИМТИЁЗЛАРИДАН ФОЙДАЛАНИШНИНГ ХОРИЖ ТАЖРИБАСИ

The article examines the research of economists on the theoretical basis of the foreign experience of using benefits. Researches on the causal aspects of the application of tax incentives were considered, the impact of tax incentives, in particular, on foreign direct investments was considered, and conclusions and suggestions were formed within the framework of the research.

The Impact of Industrial Subsidies and Enterprise Innovation on Enterprise Performance: Evidence from Listed Chinese Manufacturing Companies

Governments worldwide have introduced various tax mechanisms to foster enterprise innovation, which in turn affect enterprise performance. To promote the innovation level of domestic enterprises, China has adopted an innovation-driven strategy policy. Based on China’s manufacturing company data from 2007 to 2017, this article constructs a mediating effect model to study the direct effect of tax incentives and government subsidies on enterprise performance and the mediating effect of innovation on enterprise performance. We use RIF regression to investigate the difference between the effect of industrial subsidies on promoting technological innovation and enterprise performance. The study finds that tax incentives and government subsidies encourage enterprise performance through innovation, with the mediating effect accounting for about 34.5% and 16.8%, respectively. Industrial subsidies play a more obvious role in improving the innovation performance of high-tech enterprises. There is no significant difference in tax incentives on the performance of large enterprises and small and medium-sized enterprises. Moreover, government subsidies play an essential role in promoting the performance of large enterprises. Furthermore, with the increase in quantile, the impact of tax incentives and government subsidies on innovation is getting more extensive and more significant. Innovation has an increasing effect on enterprise performance, the effects of tax incentives on enterprise performance are becoming less and smaller, and the nexus of government subsidies and enterprise performance is generally unchanged. Therefore, implementing appropriate tax incentives and government subsidies for enterprise innovation is essential for improving enterprise performance, especially for high-tech enterprises. Enterprise size should not be used as a criterion for the government to implement tax incentives, although government subsidies tend to support large enterprises.

Does Tax Incentives Affect Future Firm Value for Corporate Sustainability?

This paper investigates how tax benefits for companies affect future firm value and current corporate performance. In addition, this paper also examines the relationship between tax benefits and future firm value for each major industry. The findings of this paper are as follows. First, tax benefits granted to companies improve current corporate performance. The effect of tax benefits that reduce corporate tax costs increases net income, which directly increases current corporate performance, such as ROA (returns on assets) and ROE (returns on equity). Second, tax benefits granted to firms reduce future firm value. Industries that receive tax benefits may have inherent taxation, which can lead to fiercer competition and ultimately lower pre-tax profit margins due to the entry of new companies or the increase in production facilities. In addition, tax benefits that cause temporary differences among the types of tax benefits for a company through deferred tax payments may be factors that hinder future improvements in corporate value. These causes result in the fact that tax benefits for a company can negatively affect its value in the long term. This paper has the following contributions. First, the findings of this paper imply that there is a limit to the positive impact of tax benefits on firms on improving corporate value in the long run. Second, through empirical analysis, this study provides objective information that the impact of tax incentives on corporate value may differ by industry.

Податкові пільги як інструмент податкового регулювання в Україні

Abstract. Introduction. In modern economic theory, theoretical discussions constantly arise about the feasibility and effectiveness of tax incentives. Tax incentives, under certain conditions, are an effective tool for supporting national competitiveness and creating a new technological core of any economic system, especially a transformational one. At the same time, the conditions for the effectiveness of the benefits provided are their strict purpose, time constraints and constant comprehensive monitoring. In addition, benefits have a certain psychological effect on business entities and increase the investment activity of enterprises. On the other hand, the ineffective practice of preferential taxation contributes to the formation of significant losses of budgetary resources of the state, which leads to a violation of economic stability, a slowdown in economic development and a decrease in the level of financial security of the state. The above confirms the relevance of the study of the impact of tax incentives on the formation of budget revenues, as well as the search for ways to optimize preferential taxation in Ukraine. Purpose. The purpose of the article is to summarize the theoretical aspects of the use of tax incentives as an instrument of tax regulation and to study the effect of preferential taxation on the formation of budget revenues in Ukraine. Results. The theoretical foundations of the functioning of tax incentives are considered. Approaches to the interpretation of the concept of "tax incentive" are generalized and its economic essence is revealed. The advantages and disadvantages of tax incentives, the rights of taxpayers to use tax incentives have been identified. The types of tax benefits in terms of direct taxes have been investigated and systematized. The analysis of losses of the state and local budgets from the provision of tax incentives has been carried out. The main sectors of the economy have been identified and analyzed, where more tax benefits are directed. Conclusions.It was found that the system of providing tax incentives in Ukraine is ineffective. Therefore, there is no doubt about the need to reduce the volume of tax benefits provided to business entities, mainly on non-transparent principles and lead to large-scale budget losses. Tax breaks are not directed to those industries that really need support, but to those that are lobbied in parliament. Therefore, it is necessary to introduce a clear mechanism for the provision of tax benefits, their monitoring, control of losses and benefits of each benefit. Proposals have been developed to improve the system of granting tax benefits and to strengthen control over their development.

Impact of Tax Incentives and Foreign Direct Investment on Manufacturing Companies in Nigeria

The paper focuses on the impact of Tax Incentives (TI) and Foreign Direct Investment (FDI) on manufacturing companies in Nigeria, the paper used structured questionnaires in collection of data; 325 copies questionnaire. Both descriptive and inferential analyses were used in data analysis, the descriptive statistics revealed that the FDI, Tax Holidays (TH), Custom Duties Exempted (CDE) have mean values of 0.2140, 0.6667 and 0.9290 respectively and transparency, political stability have the mean scores of 2.5 and 4.5454 respectively which indicates that the political stability of Nigeria is good. The Pearson’s correlation result implies that none of the explanatory variables is significantly correlated with the dependent variable. Breusch-Pagan/Cook-Weisberg test is used which gives the chi-square value and its probability at 5% significance level which specifies that the model for FDI is significant at the 0.05 level with a p-value of 0.0002 and Cross-section Dependence Test shows that cross-sectional dependence is not an issue since the probability of the FDI model is greater than the threshold p>0. 05. Wooldridge test is utilized in determining autocorrelation in the idiosyncratic error term in the panel-data model. The result of pooled Ordinary Least Square Regression is presented alongside the result of Driscoll-Kraay. Conclusion was made that TIs have a significant positive effect on FDI inflow into the Nigerian economy. The recommendations are made that: Nigerian government should maintain the elegant of TH alongside CDE and Government should intensify means of ensuring that the impact of TIs on FDI extends to agricultural sectors so as to gain more value and continuously re-invest the profit with a view to enhancing the capital base of FDI inflow.

The Impact of Tax Incentives, Political Costs, Litigation Risk and Equity Valuation on Accounting Conservatism

In Indonesia, as in other countries, according to the requirements of the tax authorities, there is a need for reconciliation to match accounting profit and fiscal profit. Some rules are allowed in accounting standards but not in taxation. In reducing losses, the company must provide evidence of transparent financial statements that prioritize conservatism. Accounting conservatism is a set of bookkeeping guidelines that call for a high degree of verification before a company can make a legal claim to any profit. The general concept is to factor in the worst-case scenario of a firm’s financial future. The authors of this study attempt to assess the level of accounting conservatism based on several factors, namely through tax incentives, political costs, litigation risk, and equity valuation The purpose of this study is the analysis of the impact of tax incentives, political costs, litigation risk, and equity valuation on accounting conservatism. The secondary data used in this study are financial reports and annual reports published on the Indonesia Stock Exchange (IDX, www.idx.co.id) for 2015-2020. The sample of this study is manufacturing companies listed on the Indonesia Stock Exchange. Based on the criteria that have been determined using the purposive sampling method, there are 23 manufacturing companies. The results show that tax incentives and equity valuation have a positive and significant effect on accounting conservatism in manufacturing sector companies in Indonesia. Instead, factors such as political costs and litigation risk negatively affect accounting conservatism.

IQTISODIYOTNI INNOVATSION RIVOJLANTIRISHDA SOLIQ MEXANIZMIDAN SAMARALI FOYDALANISH

The article studies the possibilities of effective use of the tax mechanism in the innovative development of the economy. It deals with the scientific and theoretical aspects of tax regulation of the innovative economy, the economic essence of the innovative economy and the tax mechanism. The current state of tax incentives provided for research and innovation activities, in particular, the impact of tax incentives on research and innovation activities of enterprises is critically analyzed. The research provides relevant conclusions, scientific proposals and practical recommendations.

The Impact of Tax Preferences on the Investment Attractiveness of Bonds for Retail Investors: The Case of Russia

The impact of tax incentives on the investment attractiveness of bonds for retail investors is assessed in the article. The paper presents a comparative empirical analysis of investment attractiveness of Russian bonds and bank deposits for domestic retail investors. We identify investment preferences of retail investors in Russia, analyze investment characteristics of deposits in Russian banks and a variety of bonds available for retail investors. Given the tax benefits of the recently introduced Individual Investment Account, we show that the real yield of investment in government bonds is over eight times higher than the yield of bank deposits. Despite higher risks of investing in bonds, we conclude that government bonds taking into account the tax benefits of the Individual Investment Account could be a realistic alternative to bank deposits for Russian retail investors.

Development of Tax Stimulation and Business Environment in Slovakia

Tax incentives are specific and targeted tax instruments in the economic and social policy of the state. With appropriate tools, the state can support the creation of new jobs and also the sustainability of human resources in existing companies. The article deals with the issue of stimulation of companies in Slovakia and the suitability of the applied incentives in connection with the business environment. The aim of the paper is to approach and analyze the impact of tax incentives applied in the Slovak Republic and evaluate them based on their impact on business entities, respectively business environment. The analysis of the overall development of provided tax incentives in the Slovak Republic is focused on the period from 2002 to 2018. The paper uses the method of analysis and synthesis together with the methods of tabular and graphical representation. Mathematical and statistical methods are used in individual calculations. On the one hand, it can be stated that tax incentives are important, even necessary, for countries, given the inflow of foreign capital, but on the other hand, domestic businesses are disadvantaged by which foreign investors disrupt the domestic business environment.

КОРХОНАЛАРНИНГ ИНВЕСТИЦИОН ФАОЛЛИГИГА СОЛИҚ МЕХАНИЗМИНИНГ ТАЪСИРИ

The socio-economic development of the country, sustainable economic growth, income growth and improvement of living conditions depend on the investment volume and activity. Developing countries adopt policies aimed at creating an attractive investment climate in the national economy. The impact of tax incentives and tax burdens on the investment activity of enterprises is of financial importance since the effective tax reforms carried out by states will encourage investment. The article reviews the impact of the taxation mechanism on investment activities and ways to stimulate tax benefits. The effect of taxes on enterprise costs, the volume of investments in the country, and factors negatively affecting the investment activity of the enterprises have been studied on the basis of the econometric method. The results were obtained using regression and correlation methods based on enterprise data. At the same time, it was established that taxes paid by enterprises are highly dependent on the total expenses of enterprises. This means that taxes paid have a significant impact on the costs of the enterprise. When analyzing tax revenues in relation to the gross domestic product, a negative correlation is observed, that is, increasing investment due to the fall in tax revenues. As a result of the study, proposals were developed to strengthen the investment incentives, mainly for innovation, the introduction of tax credit practices in the Tax Code to ensure budget stability while stimulating investment, simplifying tax reporting and reducing the size of the shadow economy in the country. The recommendations presented in the article are based on the analysis and international best practices that can be implemented in the process of tax reform.