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Corporate effective tax rates in Asian countries

Author

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  • Suzuki, Masaaki
Abstract
This paper aims to (a) calculate Devereux and Griffith's (2003) forward-looking effective tax rates for 12 Asian countries over a span of 30 years, (b) show the impact of tax holidays on the effective tax rate in Asian countries, and (c) empirically explore the possibility of tax competition among Asian countries. Through relevant analyses, I arrive at three key conclusions. First, while small countries with little rent in domestic markets set their effective tax rates at almost zero, large countries maintain much higher effective tax rates. Second, for countries that have generous capital allowance systems, tax holidays may lead to a rise in not only the effective marginal tax rates (EMTRs), but also the effective average tax rates (EATRs). Third, some Asian countries may engage in tax competition, at least over the EATR, for a limited period of time. However, while some countries have raised their effective tax rates in recent years, others have continued with tax reductions. These results indicate that the recent tax interactions among Asian countries differ from the simpler interactions seen among the European countries.

Suggested Citation

  • Suzuki, Masaaki, 2014. "Corporate effective tax rates in Asian countries," Japan and the World Economy, Elsevier, vol. 29(C), pages 1-17.
    • Handle: RePEc:eee:japwor:v:29:y:2014:i:c:p:1-17
    DOI: 10.1016/j.japwor.2013.11.001
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    References listed on IDEAS

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    4. Mursal Harahap & Bonar M. Sinaga & Adler H. Manurung & Tubagus Nur Ahmad Maulana, 2018. "Impact of Policies and Macroeconomic Variables on Tax Revenue and Effective Tax Rate of Infrastructure, Utility, and Transportation Sector Companies Listed in Indonesia Stock Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 95-104.
    5. Elisabeth Bustos-Contell & Salvador Climent-Serrano & Gregorio Labatut-Serer, 2017. "Offshoring in the European Union: a Study of the Evolution of the Tax Burden," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(2), June.
    6. Toshiyuki Uemura, 2021. "Evaluating Japan's Corporate Income Tax Reform using Firm-specific Effective Tax Rates," Discussion Paper Series 226, School of Economics, Kwansei Gakuin University.
    7. Mr. Manuk Ghazanchyan & Mr. Alexander D Klemm & Yong Sarah Zhou, 2018. "Tax Incentives in Cambodia," IMF Working Papers 2018/071, International Monetary Fund.
    8. Athiphat Muthitacharoen, 2017. "Assessing the Importance of Taxation on FDI: Evidence from South-East Asian Developing Countries," PIER Discussion Papers 65, Puey Ungphakorn Institute for Economic Research.

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    More about this item

    Keywords

    Corporate income tax; Effective tax rates; Tax incentives; Tax competition;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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