Tax incentive and corporate financial performance: Evidence from income tax revenue sharing reform in China

Fang, Hongsheng; Su, Yunqing; Lu, Weijun

doi:10.1016/j.asieco.2022.101505

Cited by 22 publications

(15 citation statements)

References 26 publications

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“…Sub‐national governments may augment fiscal revenue or cut fiscal expenditure to relieve fiscal pressure, but changing the structure of fiscal expenditure in a short period of time is difficult. They would endeavour to enhance tax revenue (Chen, 2017; Fang et al, 2022), causing the ETR of enterprises to rise. In general, there are two approaches for sub‐national governments to increase tax revenue: increasing the statutory EIT rate and stricter tax administration.…”

Section: Institutional Backgroundmentioning

confidence: 99%

“…We select sales revenue rather than total profit as the denominator to calculate the effective EIT rate (ETR) for three key reasons (Fang et al, 2022). (1) There are many empty or negative values for total profit in the dataset for the sample period, which reduces the validity.…”

Section: Data and Variablesmentioning

confidence: 99%

“…It must be pointed out that the state‐owned enterprises (SOEs) of the central government and foreign‐funded enterprises are excluded from the reform. Their EIT is collected by the SAT throughout the reform (Fang et al, 2022). For another thing, personal income tax (PIT) and enterprise income tax (EIT) were shared between national and sub‐national governments in new proportions.…”

Section: Introductionmentioning

confidence: 99%

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Tax incentive and firm investment: Evidence from the Income Tax Revenue Sharing Reform in China

Fang

2022

Accounting & Finance

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How to stimulate enterprise investment is a dilemma facing most countries, and tax incentives are frequently used as a solution. This study explores how China's Income Tax Revenue Sharing Reform affected enterprises' fixed asset investment (FAI). This reform did not modify the nominal tax rate or depreciation allowance directly but changed the effective enterprise income tax (EIT) rate via switching tax administration indirectly. And the change in the effective EIT rate should affect firm investment. This paper uses a regression discontinuity (RD) design to conduct a quasi-natural experiment of the reform in 2002 based on an enterprise-level dataset from the Annual Survey of Industrial Enterprises (ASIE). After the reform, the effective EIT rate (ETR) of enterprises collected by the State Administration of Taxation (SAT) was 11% lower than that collected by the Local Administration of Taxation (LAT). FAI improves by 0.7% for every 1% decrease in ETR. Tax avoidance is a key channel for the ETR to affect FAI. The FAI of smaller companies, nonstate-owned enterprises (SOEs) and companies with high size-age (SA) indexes has responded more significantly to the change in ETR brought about by reform.

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Section: Institutional Backgroundmentioning

confidence: 99%

Section: Data and Variablesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Tax incentive and firm investment: Evidence from the Income Tax Revenue Sharing Reform in China

Fang

2022

Accounting & Finance

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“…In fact, if this tax compliance continues to be explored, then tax revenue will automatically increase, which is currently the main source of state revenue (Angraini et al, 2017;Purwanto & Safira, 2020;Setiowati et al, 2020). Tax compliance is a condition where taxpayers fulfill and carry out their tax obligations in accordance with regulations and laws (Fang et al, 2022;Menichini, 2020;Rahayu, 2013;Saad, 2014).…”

Section: Introductionmentioning

confidence: 99%

Pentahelix Collaboration in Improving Taxpayer Compliance

Rahmi

Selvi

Purwaningtyas

2022

ijtc

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The government has made various efforts to improve taxpayer compliance but the efforts that have been made have not been effective enough. Collaboration between stakeholders is needed in harmonizing and synergizing all components of taxpayers. This study was conducted with the aim of analyzing pentahelix collaboration in improving taxpayer compliance at Cimanggis Tax Office. The study used descriptive qualitative methods with data collection techniques through observation, interviews and literature study. The results of the study show that collaboration has been carried out by the government well by involving various parties who take an active role, namely the private sector, academia, the media and the community. Each party has its own role in helping improve taxpayer compliance. In its implementation there are several obstacles, but coordination continues to be carried out together to carry out the commitments that have been made.

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“…In the 2020 State Budget Posture, tax revenue in 2020 accounted for IDR 1,069.97 trillion or 89.25% of the total state revenue. This means that all the funds required by the government to run the wheels of government and provide access to basic services for its citizens depends heavily on tax revenues (Fang et al, 2022;Glogowsky, 2020;Lhoka & Sukartha, 2020). The Directorate General of Taxes (DGT) is appointed by the government as an institution in charge of collecting tax revenues, carrying out tax reforms in order to achieve tax revenues in accordance with the established revenue budget.…”

Section: Introductionmentioning

confidence: 99%

The The Analysis of Directorate-General of Tax Information System (SIDJP) Effectiveness to Improve the Employee Performance in 2021 (a Case Study at Pasar Rebo Small Tax Office)

Malik

Lainun

2022

ijss

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Directorate-General of Tax (DJP) consistently reforms its tax administration system, among others by upgrading the Directorate-General of Tax Information System (SIDPJ) application to improve the previous application and therefore enable the tax officers for more efficient and effective work. The research aims to analyze the effectiveness of the Directorate-General of Tax Information System (SIDJP) to improve employee performance in 2021 (A Case Study at the Pasar Rebo Small Tax Office). The method used in the research was qualitative-descriptive using interviews, observation, and documentation to collect the data. The result of the research on the effectiveness of the SIDJP application shows that it has been effective in improving employee performance, as evidenced by the result of the interviews where employees find that they were facilitated in performing tax administration particularly tax administration and monitoring. However, the facts on the ground show that there were problems with the speed of access and occasional offline/downtime. Therefore, the recommended input for the system is to upgrade the SIDJP application with a more modern display and user-friendly layout to increase the storage and upgrade the server and bandwidth for faster data sending and receiving.

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Tax incentive and corporate financial performance: Evidence from income tax revenue sharing reform in China

Cited by 22 publications

References 26 publications

Tax incentive and firm investment: Evidence from the Income Tax Revenue Sharing Reform in China

Tax incentive and firm investment: Evidence from the Income Tax Revenue Sharing Reform in China

Pentahelix Collaboration in Improving Taxpayer Compliance

The The Analysis of Directorate-General of Tax Information System (SIDJP) Effectiveness to Improve the Employee Performance in 2021 (a Case Study at Pasar Rebo Small Tax Office)

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