Corporate Taxation and Investment: The Case of the Split Rate Corporate Tax System in Macedonia
Main Article Content
Abstract
The majority of experts agree that taxes are distortionary in nature. This is relatively true for all of the different groups of taxes, but for the corporate taxes is exceptionally obvious. The existence of the corporate tax system can affect the company’s behavior in number of ways and one of the most criticized is the ability for distortion of the choice of the sources of finance. In the following article, we explore the effects from corporate taxation on investment, through the methodological frame of the effective marginal tax rates. The objective is to analyze the investment decision in the case of isolated implementation of corporate taxes which means that the effects from the so-called “double taxation”, induced by the personal taxes are not taken in consideration. We hope to prove that these conditions generate “uneven” distribution of the burden across the projects covered with different sources of finance. Also, we intend to test and explore the properties of some alternative corporate tax systems which are widely known as neutral, such as: the comprehensive business income tax system (CBIT), the imputation corporate tax system (ICT), the full imputation corporate tax system (FICT), the allowance for corporate equity tax system (ACE) and the split rate corporate tax system (SRCT). In addition, we support our findings with a practical example: the case study from the implementation of the split rate corporate tax system in Macedonia.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Once the manuscript is accepted for publication, authors shall transfer the copyright to the publisher. If the submitted manuscript is not accepted for printing by the journal, the authors shall retain all their rights. The following rights on the manuscript are transferred to the publisher, including any supplementary materials and any parts, extracts or elements of the manuscript:
- the right to reproduce and distribute the manuscript in printed form, including print-on-demand;
- the right to print prepublications, reprints and special editions of the manuscript;
- the right to translate the manuscript into other languages;
- the right to reproduce the manuscript using photomechanical or similar means including, but not limited to photocopy, and the right to distribute these copies;
- the right to reproduce and distribute the manuscript electronically or optically using and all data carriers or storage media, and especially in machine readable/digitalized form on data carriers such as hard drive, CD-ROM, DVD, Blu-ray Disc (BD), Mini Disc, data tapes, and the right to reproduce and distribute the article via these data carriers;
- the right to store the manuscript in databases, including online databases, as well as the right to transmit the manuscript in all technical systems and modes;
- the right to make the manuscript available to the public or to closed user groups on individual demand, for use on monitors or other readers (including e-books), and in printable form for the user, either via the Internet, online service, or via internal or external networks.
Authors reserve the copyright to published articles and have the right to use the article in the same manner like third parties in accordance with the licence Attribution-Non-Commercial-Non-Derivate 4.0 International (CC BY). Thereby they must quote the basic bibliographic data of the source article published in the journal (authors, article title, journal title, volume, pagination).
References
Devereux, M.P., Griffith, R. 1999. The taxation of discrete investment choices. The institute of fiscal studies, Warwick University.
Devereux, M.P., Griffith, R., Klemm, A. 2002. “Corporate Income Tax Reforms and International TaxCompetition”. Economic Policy publications, 35.
Devereux, M.P., Sorensen, P.B. 2006. The corporate income tax: international trends and options for fundamental reform. European Commision economic papers, Brussels.
Devereux, M.P., Griffith R. 2003. Evaluating tax policy for location decisions. International Tax and Public Finance.
Earnst & Young. 2010. The E&Y 2010 Worldwide Corporate Tax Guide.
Elschner, C., Overesch, M. 2007. Trends in Corporate Tax Levels in Europe. Intereconomics.
Gruevski, I. 2012. “Corporate tax reform in Republic of Macedonia”. Conference Proceedings - 1st International Conference South - East European Countries toward European Integration 20th October 2012 Elbasan – Albania.
Gruevski, I. 2013. “Corporate taxes and their potential effects on investments.” Economic Development, 153-170.
Gruevski, I. 2013. “Effective marginal tax rates on corporate income in the Republic of Macedonia” Economic Development, Journal of the Institute of Economics - Skopje, 15 (3/2013): 129 –147.
Gruevski, I. and Gaber, S. 2013. “Indicators of the corporate income tax burden in Macedonia”. Balkan Social Science Review, 2: 223-251.
Gruevski, I., Gaber, S. and Gaber, V. 2013. “Effective tax burden on investment at corporate level in Macedonia”. Perspectives of Innovations, Economics & Business, 13 (2): 19-31.
King M.A., Fulerton D. 1984. The taxation of income from capital: A comparative study of the United States, the United Kingdom, Sweden and Germany”. University of Chicago Press;
King, M.A. 1977. Public Policy and the Corporation. London: Chapman and Hall.
King, M.A. 1983. The relative taxation of capital and labor income. Consultancy study for the Economics and Statistics Department, An OECD study, Paris.
Leibfritz, W., Thornton, J., Bibbie, A. 1997. Taxation and economic performance. An OECD Study, Paris.
OECD. (2000). Alternative tax burden measures. An OECD study, Paris.
OECD. (2007). Fundamental corporate tax reform. A tax policy studies, Paris.
Rose, M.,Wiswesser, R. 1998. Tax reform in transition economies: experiences from Croatian tax Reform process in the 1990s. London: PublicFinancein a Changing World, Macmillan.
Ruiz, F.M.M., Gérard, M. 2007. Summary, Description, and Extensions of the Capital Income Effective Tax Rate Literature. Oxford: International Taxation Handbook.
Salanie, B. (2000). The economics of taxation. Massachusetts: The MIT Press Cambridge.
The Centre for European Economic Research. 2012. - Zentrum für Europäische Wirtschaftsforschung (ZEW).
Оveresch, M. 2005. The effective tax burden of companies in Europe. CESifo DICE Report.