Capital taxation efficiency of agricultural businesses in the Slovak Republic
DOI:
https://doi.org/10.5219/1135Keywords:
agriculture, burden, efficiency, tax, assetAbstract
Effective tax rates are presented by indicators of the actual corporate tax burden, which take into account the impact of all the elements listed in the legislation. The submitted contribution explores the issue of effective taxation through effective average tax rates (EATRs) focusing on agricultural production enterprises. The analysis assessed the effect of changing the statutory tax rate (and other taxes and factors) on changing the effective average rate of capital. Taxation efficiency was monitored for selected intangible and tangible assets for 2004 and 2018. Analysis indicated a depreciation tax shield that tracked the amount of tax savings on capital investment as well as the economic rent of the project with taxation. The analysis showed that a 3% increase in the statutory rate over the reference period increased the effective average corporate rates for intangible assets by 13.35%, tangible assets by 14.25% and inventories by 16.63%. The highest annual tax saving was achieved in 2018 for tangible assets of € 4,647.50, with a four-year return.
Downloads
References
Alvarez, L. H. R., Koskela, E. 2005. Progressive Taxation and Irreversible Investment under Uncertainty. CESifo Working Paper No. 1377. p. 1-21. Available at: https://ssrn.com/abstract=648504
Arachi, G., Biagi, F. 2005. Taxation, Cost of Capital and Investment: Do Tax Asymmetries Matter? Giornale degli Economisti e Annali di Economia, vol. 64, no. 2/3, p. 295-322.
Arnold, J. M., Brys, B., Heady, C., Johansson, A., Schwellnus, C., Vartia, L. 2011. Tax Policy for Economic Recovery and Growth. The Economic Journal, vol. 121, no. 550, p. 59-80. https://doi.org/10.1111/j.1468-0297.2010.02415.x
Arnold, J., Schwellnuss, C. 2008. Do Coporate Taxes Reduce Productivity and Investment at the Firm-Level? Cross-Country Evidence from the Amadeus Dataset. CEPII. Working Paper 2008-19. 44 p. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.507.9237&rep=rep1&type=pdf
Arulampalam, W., Devereux, M. P., Maffini, G. 2012. The Direct Incidence of Corporate Income Tax on Wages. European Economic Review, vol. 56, no. 6, p. 1038-1054. https://doi.org/10.1016/j.euroecorev.2012.03.003
Baker, G. B., McKenzie, N. 1999. Survey of the Effective Tax Burden in the European Union. Report commissioned by the Ministry of Finance in the Netherlands, Hague. 300 p.
Baldwin, R. E., Krugman, P. 2004. Agglomeration, Integration and Tax Harmonisation. European Economic Review, vol. 48, no. 1, p. 1-23. https://doi.org/10.1016/S0014-2921(02)00318-5
Bánociová, A., Gál, M., Mihóková, L., Pavliková, Ľ. 2014. Zdaňovanie subjektov v slovenskej praxi. (Taxation of subjects in Slovak practice.). Košice : ELFA Press, Slovak Republic, 194 p. (In Slovak). ISBN 978-80-8086-234-3.
Barrios, S., Nicodème, G., Sanchez Fuentes, A. J. 2014. Effective Corporate Taxation, Tax Incidence and Tax Reforms: Evidence from OECD Countries. EconPapers, p. 1-59.
Bayer, O. 2012. Vládní daňové predikce: ex ante odhady a ex post hodnocení přesnosti v České republice (Government tax predictions: ex ante estimates and ex post accuracy assessments in the Czech Republic). Český finanční a účetní časopis, vol. 6, no. 1, p. 42-54. (In Czech) https://doi.org/10.18267/j.cfuc.96
Bird, R. M. 2000. Tax Incentives for Investment in Developing Countries. In Perry, G., Whalley, J. and McMahon, G. Fiscal Reform and Structural Change in Developing Countries. 1st ed., p. 201-221. London : Macmillan in association with the International Development Research Centre.
Blechová, B. 2015. The Analysis of Dependence FDI Flows on the Size of Corporate Income Tax Rates in EU Countries, Proc. 7th International Scientific Conference on Finance and Performance of Firms in Science, Education and Practice, April 23-24, 2015. Zlín, Czech Republic. p. 124-136.
Bucovetsky, S. 1991. Asymmetric Tax Competition. Journal of Urban Economics, vol. 30, no. 2, p. 167-181. https://doi.org/10.1016/0094-1190(91)90034-5
Cozmei, C. 2015. Is it Any EU Corporate Income Tax Rate-Revenue Paradox? Procedia Economics and Finance, vol. 23, p. 818-827. https://doi.org/10.1016/S2212-5671(15)00372-X
Delgado, F. J., Fernandez-Rodriguez, E., Martinez-Arias, A. 2014. Effective Tax Rates in Corporate Taxation: A Quantile Regression for the EU. Engineering Economics, vol. 25, no. 5. p. 487-496. https://doi.org/10.5755/j01.ee.25.5.4531
Devereux, M. P. 2006. Developments in the Taxation of Corporate Profit in the OECD since 1965: Rates, Bases and Revenues. Working Papers 0704, Oxford University Centre for Business Taxation. p. 1-45. Available at: https://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_07/WP0704.pdf
Devereux, M. P., Griffith, R. 1998. The Taxation of Discrete Investment Choices. Revision 2. Institute for Fiscal Studies, Working Paper Series No. W98/16. 57 p. https://doi.org/10.1920/wp.ifs.1998.9816
Devereux, M. P., Griffith, R. 2003. The Impact of Corporate Taxation on the Location of Capital: A Review. Economic Analysis and Policy, vol. 33, no. 2, p. 275-292. https://doi.org/10.1016/S0313-5926(03)50021-2
Devereux, M. P., Griffith, R., Klemm, A. 2004. How Has the UK Corporation Tax Raised so Much Revenue? Institute for Fiscal Studies. IFS Working Papers No. WP04/04. 27 p. https://doi.org/10.1920/wp.ifs.2004.0404
Devereux, M. P., Lockwood, B., Redoano, M. 2008. Do Countries Compete over Corporate Tax Rates? Journal of Public Economics, vol. 92, no. 5-6, p. 1210-1235. https://doi.org/10.1016/j.jpubeco.2007.09.005
Devereux, M. R., Griffith, R., Klemm, A. 2002. Corporate Income Tax Reforms and International Tax Competition. EconPapers, vol. 35, p. 451-495. https://doi.org/10.1111/1468-0327.00094
Dwenger, N., Rattenhuber, P., Steiner, V. 2017. Sharing the Burden? Empirical Evidence on Corporate Tax Incidence. German Economic Review, p. 1-34. https://doi.org/10.1111/geer.12157
Egger, P., Raff, H. 2015. Tax Rate and Tax Base Competition for Foreign Direct Investment. International Tax and Public Finance, vol. 22, no. 5. p. 777-810. https://doi.org/10.1007/s10797-014-9305-4
Feld, L. P., Heckemeyer, J. H. 2011. FDI and Taxation: A Meta‐Study. Journal of Economic Surveys, vol. 25, no. 2, p. 233-272. https://doi.org/10.1111/j.1467-6419.2010.00674.x
Feldstein, M., Dicks-Mireaux, L., Poterba, J. 1983. The Effective Tax Rate and the Pretax Rate of Return. Journal of Public Economics, vol. 21, no. 2, p. 129-158. https://doi.org/10.1016/0047-2727(83)90047-6
Gordon, R. 1986. Taxation of Investment and Savings in a World Economy. American Economic Review, vol. 76, no. 5, p. 1086-1102.
Gordon, R. H., Slemrod, J. 1998. Are "Real" Responses to Taxes Simply Income Shifting Between Corporate and Personal Tax Bases? National Bureau of Economic Research. NBER Working Paper 6576. 75 p. https://doi.org/10.3386/w6576
Gries, T., Prior, U., Sureth, C. 2012. A Tax Paradox for Investment Decisions under Uncertainty. Journal of Public Economic Theory, vol. 14, no. 3), p. 521-545. https://doi.org/10.1111/j.1467-9779.2012.01547.x
Gupta, A. S. 2007. Determinants of Tax Revenue Efforts in Developing Countries. International Monetary Fund. IMF Working Paper 07/184: 1-39. https://doi.org/10.5089/9781451867480.001
Hanlon, M., Heitzman, S. 2010. A Review of Tax Research. Journal of Accounting & Economics, vol. 50, no. 2-3, p. 127-178. https://doi.org/10.1016/j.jacceco.2010.09.002
Haufler, A., Stahler, F. 2013. Tax Competition in a Simple Model with Heterogeneous Firms: How Larger Markets Reduce Profit Taxes. International Economic Review, vol. 54, no. 2, p. 665-692. https://doi.org/10.1111/iere.12010
King, M. A., Fullerton, D. 1984. Introduction to the Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany. In KING, M. A., Fullerton, D. The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany. National Bureau of Economic Research. NBER Working Paper No. 1058. 48 p. https://doi.org/10.7208/chicago/9780226436319.001.0001
Kubátová, A., Říhová, L. 2012. Regresní analýza faktoru ovlivňujících výnosy korporativní dane v zemích OECD (Regression analysis of factor affecting corporate tax revenues in OECD countries). Politická ekonomie, vol. 4, p. 451-470. (In Czech) https://doi.org/10.18267/j.polek.693
Liu, X., Cao, S. J. 2007. Determinants of Corporate Effective Tax Rates: Evidence from Listed Companies in China. Chinese Economy, vol. 40, no. 6, p. 49-67. https://doi.org/10.2753/CES1097-1475400603
McKenzie, K. J., Mintz, J. M., Scharf, K. A. 1997. Measuring Effective Tax Rates in the Presence of Multiple Inputs: A Production Based Approach. International Tax and Public Finance, vol. 5, no. 1, p. 115-115.
Mendoza, E. G., Razin, A., Tesar, L. L. 1994. Effective Tax Rates in Macroeconomics: Cross-Country Estimates of Tax Rates on Factor Incomes and Consumption. Journal of Monetary Economics, vol. 34, no. 3, p. 297-323. https://doi.org/10.1016/0304-3932(94)90021-3
OECD. 2011. Efficiency Implications of Taxing Returns on FDI. Paris: Organization for Economic Cooperation and Development.
Sørensen, P. B. 2004. Measuring the Tax Burden on Capital and Labor. Cambridge : MIT Press. 358 p.
Stickney, C. P., McGee, V. E. 1982. Effective Corporate Tax Rates. The Effect of Size, Capital Intensity, Leverage, and other Factors. Journal of Accounting and Public Policy, vol. 1, no. 2, p. 125-152. https://doi.org/10.1016/S0278-4254(82)80004-5
Suzuki, M. 2014. Corporate Effective Tax Rates in Asian Countries. Japan and the World Economy, vol. 29, p. 1-17. https://doi.org/10.1016/j.japwor.2013.11.001
Šimková, N. 2016. Effective Average Tax Rate of Capital Applied to the Slovak Conditions. Politická ekonomie, vol. 64, no. 1, p. 51-64. https://doi.org/10.18267/j.polek.1054
The Law no. 595/2003 of Col. of Laws of the Slovak Republic. The Income Tax Law.
Vartia, L. 2008. How do Taxes aff ect Investment and Productivity? An Industry-Level Analysis of OECD Countries. OECD. 40 p. Available at: http://www.oecd-ilibrary.org/docserver/download/230022721067.pdf?expires=1516214062&id=id&accname=guest&checksum=0F31034760FF4535D5CAA5EE52C2871D
Vegh, C. A., Vuletin, G. 2015. How is Tax Policy Conducted over the Business Cycle? American Economic Journal-Economic Policy, vol. 7, no. 3, p. 327-370. https://doi.org/10.1257/pol.20120218
ZEW. 2014. Final Report. Project for the EU Commission TAXUD/2013/CC/120. 3025 p. Available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/docs/body/final_report_2014_taxud_2013_cc_120.pdf (accessed January 18, 2018).
ZEW. 2018. Effective Tax Levels Using Devereux/Griffith Methodology. Project for the EU Commission. TAXUD/2013/CC/120. 3601 p. Available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/final_report_2017_effective_tax_levels_revised_en.pdf
Zodrow, G., Mieszkowski, P. 1986. Pigou, Tibout, Property Taxation and the Under-Provision of Local Public Goods. Journal of Urban Economics, vol. 19, no. 3, p. 356-370. https://doi.org/10.1016/0094-1190(86)90048-3
Published
How to Cite
Issue
Section
License
Authors who publish with this journal agree to the following terms:- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
