An analysis of the corporate income tax policy of less developed countries

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Abstract

Unlike in developed countries, corporate rather than personal tax is the greater source of public finance for less developed countries (LDCs). This paper analyzes the corporate income tax policy for a large panel of LDCs. The analysis shows that although the corporate tax rate has been decreasing, corporate tax revenues have been increasing. Contrary to standard tax competition theory, there is also strong evidence that corporate income taxes are increasing with respect to the LDCs’ openness, as measured by capital mobility. The analysis also shows that the corporate tax rate is increasing with respect to the personal tax rate, as income-shifting theory predicts.

Original languageEnglish
Pages (from-to)400–427
Number of pages28
JournalThe Scandinavian Journal of Economics
Volume120
Issue number2
Early online date27 Feb 2017
DOIs
Publication statusPublished - 25 Mar 2018

Keywords

  • Corporate tax rates
  • corporate tax revenues
  • less developed countries

ASJC Scopus subject areas

  • Economics and Econometrics

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