Modelling corporate tax liabilities using company accounts: a new framework
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Authors
Ahmed, Saeed
Publication Date
2004-06-16Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics
Language
en_GB
Type
Working Paper
Metadata
Show full item recordCitation
Ahmed, S. (2004). Modelling corporate tax liabilities using company accounts: a new framework. https://doi.org/10.17863/CAM.5417
Abstract
This paper presents a micro-econometric approach to corporate tax modelling. Using firm level panel data of UK companies in three diverse sectors, the paper examines the impact of different variables on corporate tax liabilities of the firms. Many strong results stand out which suggest that firms reduce their tax liabilities through different channels and tax sheltering activities to maximise �after-tax� profits. The evidence shows, inter alia, that not only are trading profits and capital gains important determinants of corporation tax payments but so also are their components, such as gross profit, cost of sales, expenses, and even one-off �exceptional items� and �extraordinary items�. The results also indicate that firms� size, organisational structure, investments, and financial and dividend policies are important factors impacting on corporate tax liabilities. Moreover, different tax reliefs and allowances are strongly associated with corporation tax payments asymmetrically. The findings have implications for microsimulation modelling, financial transparency, and corporate governance.
Keywords
Classification-JEL: C33, E17, G32, G35, H25, H32, Corporate income tax, panel data, corporate structure, financial and dividend policy, revenue estimation and forecasting, microsimulation modelling
Identifiers
This record's DOI: https://doi.org/10.17863/CAM.5417
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