Anticipating Tax Changes: Evidence from the Finnish Corporate Income Tax Reform of 2005

Seppo Kari (), Hanna Karikallio and Jukka Pirttilä

No 447, Discussion Papers from VATT Institute for Economic Research

Abstract: Using register-based panel data covering all Finnish firms in 1999–2004, we examine how corporations anticipated the 2005 dividend tax increase via changes in their dividend and investment policies. The Finnish capital and corporate income tax reform of 2005 creates a useful opportunity to measure this behaviour, since it involves exogenous vexamine how corporations anticipated the 2005 dividend tax increase via changes in their dividend and investment policies. The Finnish capital and corporate income tax reform of 2005 creates a useful opportunity to measure this behaviour, since it involves exogenous variation in the tax treatment of different types of firms. The estimation results reveal that those firms that anticipated a dividend tax hike increased their dividend payouts in a statistically significant way. This increase was not accompanied by a reduction in investment activities, but rather was associated with increased indebtedness in non-listed firms. The results also suggest that the timing of dividend distributions probably offsets much of the potential for increased dividend tax revenue following the reform. JEL Classification: H25, H32

Keywords: Corporate income taxation; dividends; tax reform; anticipation effects; Taxation; Verotus; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.doria.fi/handle/10024/148436

Related works:
Journal Article: Anticipating Tax Changes: Evidence from the Finnish Corporate Income Tax Reform of 2005* (2008)
Working Paper: Anticipating Tax Change: Evidence from the Finnish Corporate Income Tax Reform of 2005 (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fer:dpaper:447

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Papers from VATT Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Anita Niskanen ().