Tax Burden Research Articles

Corporate culture and tax planning

AbstractIn this paper, we study the relationship between corporate culture and tax planning. Using the competing values framework and natural language processing techniques, we document that firms with collaboration-oriented (control-oriented) corporate cultures are associated with lower (higher) effective tax rates. We further find that firms with collaboration-oriented corporate cultures achieve these tax savings by engaging in tax-sheltering activities and that such savings positively affect firm value. While firms with salient control-oriented characteristics have previously been recognized to benefit from small tax burdens, we contribute with new evidence suggesting that intra-organizational reciprocity also promote tax savings that ultimately benefit shareholders.

Beyond Shelter: A Multi-Stakeholder Approach to Canada’s Housing Crisis

The affordable housing crisis in Canada has reached a critical juncture, with far-reaching consequences for individuals, families, and communities across the nation. As property prices soar and income levels fail to keep pace, an increasing number of Canadians find themselves struggling to secure suitable housing. This opinion article argues that addressing the affordable housing crisis requires a comprehensive approach that involves the collaborative efforts of governments, architects, and builders. The article examines the multifaceted nature of the affordable housing crisis, highlighting its impact on various socioeconomic groups and the challenges faced in finding solutions. It emphasizes the importance of affordable housing in fostering economic stability, promoting health and well-being, bolstering educational outcomes, and nurturing social cohesion and community development. The government's role in addressing the housing affordability crisis is discussed, focusing on the burden of government fees and taxes, zoning and regulatory compliance, and proposals to mitigate their impact. The article advocates for reforming fees, implementing policy alterations, and adopting a proactive and collaborative approach to create a more conducive environment for affordable housing development. The architects' role in addressing the housing affordability crisis is explored, highlighting the potential of architectural design competitions in promoting innovation, community engagement, and recognizing excellence in affordable housing design. The article emphasizes the importance of architectural innovation and creativity in envisioning and designing sustainable, community-centric housing solutions that cater to residents' psychological and social needs. The role of builders and developers in addressing the housing affordability crisis is also examined, with a focus on integrating sustainability for cost reduction, adopting new construction methods and materials, forming public-private partnerships for sustainable housing projects, and investing in education and training for sustainable practices. The article concludes by emphasizing the urgent need for a collective commitment to action, demanding bold leadership, creative thinking, and unwavering determination to build a future where every Canadian has access to safe, adequate, and affordable housing. It underscores the importance of a holistic approach that addresses the direct and indirect factors contributing to the housing affordability crisis, ultimately cultivating a more equitable and sustainable housing market that benefits current and future homeowners while bolstering the overall economic and social well-being of the nation.

Navigating the Nexus of Tax Avoidance and Strategic Planning: Insights and Strategies

Tax avoidance and tax planning are two concepts often discussed in the context of corporate governance, financial management, and government fiscal policy. While both aim to minimize tax liabilities, they differ significantly in their legality, ethical considerations, and long-term implications. Tax planning involves strategic decisions within the bounds of tax laws to optimize tax efficiency, ensuring compliance while maximizing benefits for stakeholders. In contrast, tax avoidance exploits loopholes or ambiguities in tax laws to reduce tax burdens, sometimes pushing the boundaries of legality and ethical standards. This abstract explores the distinctions between tax planning and tax avoidance, their impacts on financial transparency, corporate social responsibility, and regulatory responses worldwide. Understanding these distinctions is crucial for policymakers, corporations, and taxpayers navigating the complexities of modern taxation systems. This paper is a humble effort to understand the concept of ‘Tax Evasion’ and ‘Tax Planning’ difference between these two concepts. It also explores how can existing legal aids be made more accessible and reap better results.

DAMPAK PENERAPAN TARIF PAJAK EFEKTIF RATA-RATA (TER) TERHADAP PERHITUNGAN PAJAK PENGHASILAN PASAL 21 WAJIB PAJAK ORANG PRIBADI KARYAWAN TETAP PADA PT. ANUGRAH SEKAYU

This descriptive research is aiming to analyze the impact of implementing TER on the calculation of PPh 21 WPOP for permanent employees at PT. Anugrah. The analysis technique is conducted by comparing calculation of PPh 21 WPOP based on tariffs 17 UU-HPP 7 of 2021 with TER based on PMK 168 of 2023. The secondary data is in the form of all income and calculation of PPh 21 for 32 WPOP permanent employees of PT. Anugrah. The results of this research show the calculation of PPh 21 WPOP a month for 32 permanent employees by applying TER is Rp 3,888,343, while the PPh calculation based on the article 17 rate is Rp 4,242,485. There is a difference in excess income tax deduction of Rp 354,142 a month. Implementation of TER can save taxes. It reduces tax burden and makes calculation process simpler and easier, so PMK regulation 168 of 2023 can reduce WPOP taxes, which is expected to increase awareness and voluntary compliance of WPOP. Apart from that, tax regulations have positive impact in increasing the amount of tax revenue. For this tax overpayment/withholding, request can be submitted for compensation.

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.

Multi-Criteria Evaluation of the Institutional and Tax Environment for Business in the EU Economies

The purpose of this study is to evaluate the institutional and tax environment for businesses in 21 countries of the European Union (EU), using a multi-criteria analysis and, in particular, the PROMETHEE II method, based on thirteen evaluation criteria and the ranking of the European economies. Through the research, the importance of factors related to the efficiency of the tax administration, the tax capacity of the country, the growth rate of the economy, the quality of institutions, the level of corruption, the tax burden, the time of tax compliance and the political stability of the country is studied, in the formation of an attractive environment for the development of entrepreneurship in the EU economies. Moreover, the results of the analysis revealed the existence of significant fiscal and institutional differences between the EU economies under investigation, regarding the development of entrepreneurship. These differences are due to the size of the economy, the institutions, the history, the economic crises of each country and a wide range of dissimilar policy recommendations, which reflect asymmetric policy responses. The study concludes by offering theoretical and political recommendations to improve the institutional and fiscal environment in EU economies so that entrepreneurship can play an important role in improving the economic and social situation of a country.

Distributional Incidence of Indirect Taxation on Consumer Groups in Sri Lanka: A Descriptive Study

This study investigates how the indirect tax burden was distributed among households under different aspects. Sri Lanka's tax structure represents more indirect tax and significantly less direct tax income. Direct taxes satisfy the equity principle of taxation, while indirect tax is violated. Direct taxes are imposed according to the ability to pay. Persons who have a higher income will pay a higher rate of income tax, and persons who have less income will pay a lower rate of income tax. Unlike direct taxes, indirect taxes are paid by both rich and poor persons irrespective of their income level. Thus, the burden of the indirect tax will be badly impacted on poor households because when they purchase goods and services from the market, they pay a significant portion of indirect taxes compared with the average income. A consumer survey was performed, and data were collected using a structured questionnaire under the light of the Stratified Convenient Sampling Method. One hundred fifteen commodity baskets were selected based on the Colombo Consumer Price Index under the broad categories of food and non-food and eleven subcategories of commodity groups. Colombo District was selected as the sample district. Four hundred eighty-two respondents were collected, representing low-income, middle-income, and high-income households. The descriptive and quantitative approach were used for the analysis. The findings of the study emphasized that the indirect tax burden rate of low-income households was significantly greater than the indirect tax burden rate of high-income households. The regressive effect was reflected in the findings, indicating that poor households are bearing a higher indirect tax burden rate in terms of average income and average expenditure. The derived Lorenz Curves and the calculated Gini Coefficients also emphasized the regressive effect of the indirect tax, presenting an upward-sloping Lorenz Curve and negative Gini Coefficient values.

Developing Economic and Mathematic Models of Company Tax Burden Taking into Account Specific Features of Industry

The importance and appraisal of enterprise tax burden is underlined by its serious impact on its finance and business functioning. In order to conduct a high-quality tax controlling, cut tax risks and achieve optimal tax burden the author focuses attention on studying theoretical principles and approaches to estimating the impact of tax burden on business activity of the organization. Through analyzing economic and mathematic methods of assessing company tax burden elaborated by Russian scientists, focus was made on the importance of investigating this indicator within the frames of econometric modeling with the help of language R. To estimate the impact of tax burden on results of business activity and finance and economic factor on the amount of tax burden the article proposed to build models with panel data, whose shaping can help identify steps aimed at upgrading tax control and tax burden management.

A Fair Investment Environment: The Impact of the Shadow Economy, the Harshness of the Courts Against Corrupt Officials, Tax Pressure and Restrictions on Business

Creating a fair investment environment is crucial for economic growth and attracting domestic and foreign investors. The purpose of this study is to find out how the shadow economy, harshness of courts against corrupt officials, tax pressure, and restrictions on business affect the fair investment environment. Therefore, two economic-mathematical models are built using multiple least squares regression analysis, in which the outcome variables are: in model 1 ‒ control over corruption, which is a component of the Global Governance Index; in model 2 ‒ the European Business Association’s Investment Attractiveness Index. The composition of the factor attributes in both models is the same: Corruption Perceptions Index by Transparency International; level of shadow economy according to the Ministry of Economy of Ukraine; the number of criminal cases in courts under the article “Acceptance of an offer, promise or receipt of an undue benefit by an official” using open data from the Unified State Register of Court Decisions; total tax and fee rate, which reflects taxes and mandatory payments as a percentage of commercial profit, determined by the World Bank Group methodology; assessment of “Starting Business” by Doing Business, according to the methodology of the World Bank Group. The modeling is based on the example of Ukraine for 2012‒2022. Calculations based on Model 1 show that restrictions on business have the greatest impact on the corruption control indicator (a 10% reduction in restrictions leads to a 3-point reduction in the need to control corruption), the shadow economy and tax pressure have an average impact (a one-point increase in them will increase the level of corruption by 0.4 points). The harshness of the courts against corrupt officials has the least impact (most corruption cases in Ukraine do not reach the courts). Calculations based on Model 2 show that the complexity of starting a business exerts the greatest impact on investment attractiveness (if it decreases by 15%, investment attractiveness will increase by almost 1 unit). The average impact is exerted by the increase in the shadow economy (a 10% increase in the shadow economy leads to a rise in investment attractiveness by 0.4 units). The insignificant impact is exerted by the tax burden and judicial punishment of corrupt officials.

РОЗВИТОК МОБІЛЬНИХ ПЛАТЕЖНИХ СЕРВІСІВ: МАРКЕТИНГ FINTECH ПРОДУКТІВ

In today's world, financial technology (FinTech) has become an integral part of everyday life, significantly changing the way people interact with financial services. One of the most dynamically developing industries is mobile payment services. They provide a fast, convenient and secure way to carry out financial transactions through mobile devices. However, despite the rapid spread of mobile payment services, there are a number of problems and challenges associated with their development and promotion on the market. The purpose of the study is to analyze the development of mobile payment services in the context of FinTech, as well as to develop effective marketing strategies for promoting these products on the market. The object of the study is mobile payment services as an innovative segment of FinTech and their marketing in the modern market, namely aspects related to the development, implementation, promotion and use of mobile payment services. Scientific publications and monographic editions, magazine articles and materials of scientific and practical conferences became the methodological basis of the research. Content analysis of scientific periodicals was used during the research; comparative critical analysis of existing approaches and methods of analysis of financial stability and tax burden; statistical methods of analysis. The main hypothesis of the research is that effective marketing strategies focused on technological innovation, personalization of user experience and taking into account the cultural characteristics of markets significantly increase the adoption and use of mobile payment services among consumers. Summary of the main material. Innovative technologies and platforms based on the concept of embedded finance and their potential to change and transform the financial sphere are highlighted. The technological, economic and regulatory aspects of the use of embedded finance are analyzed, and the key challenges and opportunities associated with their application are identified. As a result of the study, it is established that integrated finance can become a significant factor in accelerating the innovative development of the financial sector, improving the quality of financial services, and ensuring greater accessibility and efficiency in the provision of financial products and services. Originality and practical significance. The originality of the scientific article lies in the comprehensive approach to the study of mobile payment services through the prism of marketing strategies in the FinTech sector. Despite the considerable interest in the technological aspects of mobile payments, the issues of effective marketing of these products remain less studied. The practical significance of the article is that the research results can be used by both FinTech companies and marketing specialists to improve their strategies and increase the efficiency of mobile payment services. Conclusions and prospects for further research. The analysis showed that the introduction of the latest technologies, such as blockchain, artificial intelligence and biometric authentication methods, significantly increases the security and convenience of mobile payment services, which contributes to their popularization among consumers. The combination of technological innovation, personalization and cultural adaptation in marketing strategies is the key to successful promotion of mobile payment services. Further research is needed to assess the long-term consequences of introducing new technologies into mobile payment services. Particular attention should be paid to data security and confidentiality.

Tax aggressiveness in a scenario of economic crisis and financial difficulty: an analysis of companies listed on B3

Objective: This study aimed to examine the relationship between economic crisis scenarios, financial difficulties, and tax aggressiveness in companies listed on B3. Methodology: This descriptive and documentary study employed a quantitative approach, incorporating a sample of 326 companies. Data analysis entailed using descriptive statistics and regression analysis with panel data. Results: The findings of this study suggest that a crisis environment does not promote the adoption of aggressive tax strategies by the companies within the sample. This contradicts established literature, which has posited that there is a heightened effort to decrease tax liability during periods of crisis. Nonetheless, it was observed that companies experiencing financial difficulties tend to adopt aggressive tax strategies in an effort to alleviate their tax burdens. Study Contributions: This research aims to contribute to discussing tax aggressiveness among Brazilian companies during economic crises, pointing out discrepancies with previous studies. Additionally, it seeks to broaden the understanding of tax aggressiveness in situations of crisis and financial difficulty, thereby enhancing the body of knowledge in the tax domain.

Taxing Dilemmas: A Decade of Balancing Act in India’s Individual and Corporate Taxation for Social Equity and Economic Progress

India’s tax rates over the past decade have been analyzed to balance social equality, economic competitiveness, and sustained progress. The government’s shift towards flatter tax structures aims to stimulate economic growth and promote manufacturing. However, the adverse effects of lowering corporate tax rates on ordinary citizens include widening income disparities, underfunding of social programs, job security decline, decreased government capacity, and impact on small enterprises. The government’s ability to fund infrastructure improvements, healthcare facilities, and educational programs is greatly impacted by corporate taxes. Small enterprises may experience increased competitiveness and financial strain, while major corporations may profit from lower tax burdens. To ensure a balanced economic trajectory, policymakers must continually evaluate and fine-tune the tax structure, considering the broader implications on social equity and the quality of life for the majority of the population.

부동산 공시가격 현실화 정책에 따른 재산세부담의 변화 분석

This study focused on the impact of the policy of realizing published prices of real estate on real estate property taxes and estimated the property tax burden using real estate price announcement data for land, single-family house, and apartment from 2017 to 2020. In addition, the changes in tax burden by year were analyzed and compared by real estate type, price level, and region to discuss the impact of the published price realization policy and suggest policy implications. According to the analysis of changes in the estimated property tax burden, the property tax burden increased significantly after the realization policy, and the gap in the property tax burden by region and price level widened. And the tax burden increased intensively on specific real estate types and high-priced real estate. This suggests that the policy of applying the realization of the published price differently by price range can rather hinder vertical and horizontal equity of taxation among taxpayers.

ECONOMIC AND LEGAL ASPECTS OF PROVIDING INNOVATIVE DEVELOPMENT OF THE ECONOMY IN THE CONDITIONS OF INCREASED INFLUENCE OF FACTORS OF A MILITARY NATURE: THE EXPERIENCE OF UKRAINE AND THE COUNTRIES OF CENTRAL AND EASTERN EUROPE

The purpose of the article is to analyze the state of innovative development of the economy of Ukraine and the countries of Central and Eastern Europe and to identify the problems of its provision in the conditions of martial law. The results of the study prove that factors of a military nature have an ambiguous effect on stimulating the innovative development of the country's economy. It has been established that economic evolution through innovation is a prerequisite for strengthening its competitiveness in countering modern challenges and threats. The results of the empirical study made it possible to find out that during the large-scale aggression of Russia on the territory of Ukraine in 2022, a decrease in the level of innovative economic development was also observed in the countries of Central and Eastern Europe. It was established that in 2023, the countries of the analyzed group managed to increase the indicators of innovative activity of business entities and the parameters of the innovative development of the economy. Important problems in ensuring economic progress through innovative activity have been identified: (1) shortcomings of the legislation regulating the innovation sphere; (2) lack of formation of a unified innovation infrastructure; (3) significant tax burden; (4) lack of an effective system of taxation and provision of tax benefits and preferences; (5) lack of effective investment mechanisms in the field of innovation; (6) low level of technological capacity of production facilities; (7) imperfection of the education system; (8) low level of financing of research activities; (9) focus on the export of raw materials and dependence on high-tech imports. In order to ensure sustainable innovative development of the country's economy, it is necessary to create appropriate conditions for the development of innovative potential, activate the creation of cross-border innovation clusters, and strengthen the country's investment attractiveness.

Theoretical and methodological aspects of tax analysis for the company

Tax committees routinely scrutinize the accrued tax payments, assessing their dynamics through data extracted from tax registers, financial and tax reports. This analysis unveils various reasons for non-payment of tax liabilities and pinpoints factors influencing the formation of the tax base. Adhering to the provisions of the Tax Code of the Republic of Kazakhstan is crucial for accurately determining the tax base for each type of tax. The analytical process unfolds in stages throughout the reporting year, enabling the tracking of tax liabilities’ dynamics, identification of unpaid amounts, monitoring changes in tax policy, and evaluating the impact of tax changes on the overall tax burden. In addition, it should be noted that all the work of analysts is aimed at preventing tax offences. As sources of analysis we recommend using primary accounting data, tax accounting data in the form of tax registers, financial and tax reporting. A tax analysis is necessary in order to answer the question of how much the company pays taxes to the budget. Based on the tax analysis data, each manager independently determines the optimal tax burden and, depending on this, takes measures for tax planning. Based on the results of the tax analysis, it is possible to determine which taxes are repaid on time, and, if necessary, develop specific measures to reduce the tax burden. Given the evolving landscape of the digital economy in Kazakhstan, the relevance of studying tax analysis becomes imperative. The article comprehensively explores the essence, purpose, and objectives of enterprise tax analysis, delves into the information support necessary for tax analysis, and proposes a systematic approach to indicators for effective tax analysis.

TAX BURDEN: APPROACHES TO DETERMINATION AND THEIR INFORMATION SUPPORT

Analysis of tax burden is importantfor assessing the effectiveness of tax policy of the state, tax management of enterprises, is an indicator of the level of tax security of all economic entities and the indicator by which tax authorities carry out tax control of taxpayers. Tax burden scientists consider on the macro-(level of tax burden on the economy in general) and micro-level (the level of the load on the enterprise). At the macro level, it is advisable to determine the level of the total tax burden as the ratio of the amount of tax revenues to the consolidated budget of Ukraine and the revenues of the single social contribution to GDP, as well as the share of tax payments of the integrated budget in GDP, the proportion of social payments in GDP and the rate of growth of these indicators. Analysis of the level of tax burden in Ukraine showed that in 2022 in the conditions of Russia’s full-scale war, GDP at market prices decreased by 4.92%, and the amount of tax payments of the reduced budget increased by 9.89%. In 2020, due to the introduction of quarantine in order to prevent the spread of acute respiratory disease COVID-19 in Ukraine, the GDP growth rate was low (5,53%), and the rate of growth of tax payments was high (15,71%). At the enterprise level, the analysis can be carried out according to the indicators of the total tax burden, tax burdens on income, expenditure, on cash flows, as well as tax on all taxes paid and SSC separately. The source of information for determining the indicators is the Financial Results Report (the aggregate income report and the Cash Flow Report (by direct method). In the system of electronic administration of taxes and duties by the tax authorities, monitoring of indicators-criteria of high-risk tax burden is carried out, according to which the payers canbe included in the plan-chart of checks: the level of payment of income tax and VAT. If the indicators are below 50 and more percent of the level of payment of the relevant tax for the industry, the enterprise falls into the plan-chart of inspections. Theinformation source for determining the level of payment of taxes is the Income Tax Declaration and the VAT tax declaration. Indicators of the level of tax payments by industries are published on the website of the State Tax Service of Ukraine. Also, the tax service determines indicators-indicators of unconditional registration of taxpayers, among which is the indicator of tax burden D, which is automatically formed in the Monitoring System of risk assessment criteria (MSRAC) of the Electronic Cabinet of Taxpayers or can be calculated from the data of the turnover and balance of enterprises. Monitoring of indicators of tax burden on the part of tax authorities is of paramount importance for monitoring compliance of taxpayers with tax legislation and implementation of the tax policy of the state to fill the budget with tax revenues.In the tax management of enterprises, the analysis of tax burden indicators is intended to find out the degree of their compliance with the established limits, industry indicators in order to take timely optimization decisions and avoid checks, penalties and the need to pass the procedure of unlocking tax charges.

Development of an economic and information system for the optimization of city traffic flows

The paper presents a critical analysis of current approaches to reorganizing urban transportation routes. It proposes addressing the problem of optimizing traffic flows as a multidimensional issue encompassing social and economic aspects. An economic-information model for continuous monitoring and optimization of urban traffic flow configurations based on the criterion of congestion wait time has been developed. The calculation of the economic consequences of such waiting time is proposed. The developed system has practical significance and can be applied in managing traffic flows as an economic subsystem of the city within its socio-economic system. Urban transportation infrastructure in Ukraine faces significant challenges due to social changes, including increasing passenger flow, extended waiting times, and the need to adhere to modern urban planning standards. Current trends involve redistributing street and road space based on principles of equal access and safety. This includes pilot actions, intermediate reconstruction, and comprehensive reorganization of urban space and transportation routes. Proposed methods for enhancing transportation infrastructure include improving government management, implementing proactive management strategies, executing investment projects, establishing public-private partnerships, temporarily reducing tax burdens, developing comprehensive solutions for consumers, and optimizing transportation pricing. These strategies aim to address the pressing problems in Ukraine's transport sector and facilitate sustainable development and growth. The study focuses on the financing of infrastructural projects in Dnipro city through the municipal budget. It proposes integrating economic-mathematical models into a unified economic-information system for optimizing traffic flows, allowing for continuous monitoring and improvement. This system emphasizes minimizing congestion wait times and can adapt to dynamic changes in traffic patterns, ensuring efficient and effective urban traffic management. By implementing this system, the city can enhance its transportation network, contributing to overall economic efficiency and better quality of life for its residents.

II. Loi de Beaumont 1182

Summary The Law of Beaumont, established by a charter issued in 1182, was granted over a period of about 150 years for up to 700 villages in present-day France, Belgium, Luxembourg and Germany. It seemingly was to provide incentives to settle or stay in such villages. Based on an analysis of the Latin text (provided with a German translation) the paper questions that the focus of the charter was accurately described in older literature and common handbook entries. In those, the impression is given that the focus was on liberation from serfdom, tax relief and municipal self-government. The paper concludes that a high degree of self-government was indeed an outstanding feature, although it remains unclear whether the citizens originally had the right to elect mayor and jurors. Particularly favourable tax burdens could not be substantiated. There is no mentioning at all of any liberation from serfdom and burdens associated with it. The focus of the charter is on a precise definition of tax burdens and of penalties for crimes and their distribution, and on rules of legal process. Legal certainty in these regards must have been the core of its attractiveness both for citizens and lords and explain its popularity.

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.

How distortive are turnover taxes? Evidence from China

We investigate the impact of tax cascading on upstream and downstream firms. As a natural experiment, we explore a reform that replaced turnover taxes with value-added taxes for service industries in China, which effectively removed tax cascading. We find a relative increase in sales, R&D investment, and employment for affected service firms. These changes are mainly driven by increased outsourcing from manufacturing firms, and are unlikely to be caused by changes in firms’ tax burden or output prices. Our study provides new evidence on how taxation affects supplier networks and firm performance.