Corporate and Statutory Tax Rates
CEU Department of Economics Working Paper No. 4/2002
25 Pages Posted: 14 May 2002
Date Written: March 22 2002
The paper investigates the factors that cause effective corporate tax rates (ETRs) to diverge from the statutory rate of corporation tax (SRCT). Based on accounting identities, a model of ETRs is specified that allows quantification of the effects of observed firm heterogeniety on how its ETRs may differ fromt he SRCT. Results suggest that significant factors are interest payments, R&D expenditure, foreign ownership, stock-market listing and the number of subsidiaries. The results also suggest that unobserved firm heterogeneity plays a significant role.
Keywords: firms, effective tax rate
JEL Classification: H25
Suggested Citation: Suggested Citation