The Increasing Trend in Effective Tax Rates in India: Role of Macroeconomic Factors, Tax Policy Changes and Firm Characteristics

IF 1.2 Q3 BUSINESS, FINANCE
A. Athira, P. J. Jijo Lukose
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引用次数: 0

Abstract

We show that over the last two decades, India’s effective tax rates (ETRs) have increased by 7.8 percent, which contrasts with the downward trend in ETRs for US firms documented by Dyreng et al. (2017). After controlling for changes in firm characteristics, macroeconomic factors, and tax policy changes, our findings show that ETRs increased by 0.37 percent per year during the sample period. Further, we examine the proposition that public firms are more likely to engage in non-conforming tax management than private firms. We observe a stronger upward trend in ETRs among private firms than public firms, consistent with the capital market pressure hypothesis. The permanent book-tax difference is the primary driver of the ETR trend for both private and public firms. Our findings contribute to the recent debate about the trend in ETRs by undermining concerns regarding rising corporate tax avoidance and reinforcing the argument that improved tax efficiency and economies of agglomeration in countries with large domestic markets contribute to higher ETRs.JEL Codes: G38, H25, H26, H32
印度实际税率的增长趋势:宏观经济因素、税收政策变化和企业特征的作用
我们的研究表明,在过去二十年里,印度的实际税率(ETRs)增长了7.8%,这与Dyreng等人(2017)所记录的美国公司ETRs下降趋势形成了鲜明对比。在控制了企业特征变化、宏观经济因素和税收政策变化之后,我们的研究结果表明,在样本期内,企业税前利润每年增长 0.37%。此外,我们还研究了上市公司比私营企业更有可能进行不合规税务管理这一命题。与资本市场压力假说相一致,我们观察到私营企业的 ETR 上升趋势比上市公司更强。永久性账面税率差异是私营企业和上市公司企业所得税率趋势的主要驱动力。我们的研究结果有助于近期关于企业所得税税率趋势的讨论,因为它削弱了人们对企业避税行为增加的担忧,并强化了以下论点,即国内市场规模大的国家提高税收效率和集聚经济有助于提高企业所得税税率:G38, H25, H26, H32
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来源期刊
CiteScore
1.80
自引率
33.30%
发文量
19
期刊介绍: The Journal of Emerging Market Finance is a forum for debate and discussion on the theory and practice of finance in emerging markets. While the emphasis is on articles that are of practical significance, the journal also covers theoretical and conceptual aspects relating to emerging financial markets. Peer-reviewed, the journal is equally useful to practitioners and to banking and investment companies as to scholars.
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