Influence of Ownership Structure on the Determinants of Effective Tax Rates of Spanish Companies

Abstract

This paper examines the effect of state ownership on the effective tax rates of Spanish companies. Using information regarding 3169 companies during the period of 2008–2014, we show that there are significant differences between the tax burdens of non-state-owned enterprises (NSOEs) and state-owned enterprises (SOEs), with the effective tax rates of private ownership companies being higher than those of state-owned firms. Company features, such as size, leverage, research and development investment, profitability, firm age, foreign operations, and auditing determine the tax burden of private ownership firms. That of state-owned companies, however, is affected only by leverage and capital intensity. For both SOEs and NSOEs, the tax burden is lower when they are taxed under the Spanish special taxation regime for small- and medium-sized enterprises. In short, company characteristics are more important in private ownership firms, in which almost all the variables considered have certain repercussions. This result may be because private ownership companies devote more resources to tax avoidance, and their fiscal strategy may determine their economic and financial structure. However, SOEs present significantly lower effective tax rates than NSOEs, probably because of the tax incentives that the law provides for them to support their sustainability.

Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

“…Jindrichovska et al [18], on the case of 260 Czech firms, also found a negative relationship between growth of tangible assets, as a share of total assets, and return on assets Sustainability 2020, 12, 1689 4 of 18 of those firms. Fernández-Rodríguez et al [19], while examining the influence of ownership structure on tax rates of Spanish firms, found that growth of fixed assets, expressed by capital intensity, has a negative and significant relationship with effective tax rate of the state owned companies, expressed as a relationship between tax expense and pretax income. Aljinović Barać and Muminović [20], on the case of dairy processing industry in Slovenia, Croatia, and Serbia found that companies with higher level of capital investments per employee obtain lower financial performance, expressed by return on assets, and that possible explanation for that can be found in the time lag between the moment of investment and the moment in the future when investment will generate the profit.…”

Impact of Corporate Governance on Effective Corporate Tax Rates Among Listed Firms in Kenya

“…A study by Congressional Budget Office (GAO, 2008) revealed that Effective tax rates are always lower than the statutory tax rates. Similarly a study by Pomerleau and Jahnsen (2017) and Fernandez-Rodriguez, Garcia-Fernandez and Martinez-Arias (2019) also shows that ETRs are always lower than the statutory tax rates.…”

“…Firms that reported losses in the period are excluded from the sample since negative ETR has no meaning. This follows the usual procedure from previous studies (Fernandez-Rodriguez et al, 2019). Secondary data was extracted from published financial statements for the period 2011 to 2017 using a content analysis form.…”

Literature Review and Content Analysis: Internet Finance, Green Finance, and Sustainability

“…Low financial efficiency and low or high financial competition will reduce the R & D efficiency of the company [14]. Elena fern á nude Rodr íGuez (2019) pointed out in the study of Spanish sustainable enterprises that the tax preference provided by law to support its sustainability may make the effective tax rate of state-owned enterprises lower than that of non-state-owned enterprises [15].…”