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

Research output: Contribution to journalArticle

Abstract

Unlike developed countries, corporate tax rather than personal tax revenues are the greater source of public finance for less developed countries (LDCs). This paper analyses the corporate income tax policy for a large panel of LDCs over the period 1980 – 2006. The analysis shows that although the corporate tax rate has been decreasing in LDCs, corporate tax revenues have been increasing as a percentage of total tax revenues and GDP. Contrary to standard tax competition theory, there is also strong evidence that corporate income taxes in LDCs are increasing in the country’s openness as measured by capital mobility. The analysis also shows that the corporate tax rate is increasing in the personal tax rate as income-shifting theory predicts. However this has not translated into increased corporate tax revenues. Of equal interest is the lack of evidence of a relationship between the LDC’s government revenue needs and its corporate tax rate.
LanguageEnglish
Pages400–427
Number of pages28
JournalScandinavian Journal of Economics
Volume120
Issue number2
Early online date4 Mar 2018
DOIs
StatusPublished - Mar 2018

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Corporate income tax
Less developed countries
Tax policy
Tax revenues
Corporate tax rates
Corporate tax
Personal taxes
Tax rate
Government revenue
Public finance
Tax competition
Income shifting
Capital mobility
Developed countries
Openness

Keywords

  • Sustainability
  • corporate tax rates
  • corporate tax revenue
  • less developed countries

Cite this

An analysis of the corporate income tax policy of less developed countries. / Baker, Paul L.

In: Scandinavian Journal of Economics, Vol. 120, No. 2, 03.2018, p. 400–427.

Research output: Contribution to journalArticle

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