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The effective income tax rate: A cross-country analysis

Vol. 25, Iss. 9, SEPTEMBER 2019

Received: 22 July 2019

Received in revised form: 5 August 2019

Accepted: 19 August 2019

Available online: 30 September 2019

Subject Heading: FISCAL SYSTEM

JEL Classification: H21, H25, H32

Pages: 2125–2139

Ievleva A.Yu. Saint-Petersburg State University (SPbSU), St. Petersburg, Russian Federation

Subject The article examines the effective income tax rate as an aspect of the tax burden borne by business.
Objectives The research verifies hypothesis on a reduction in the effective income tax rate in Europe and Russia and differentiation of the indicators across businesses in terms of their size and types of activity.
Methods As part of research, I compute the effective income tax rates, referring to financial statements of Bureau van Dijk Amadeus and SPARK. Conducting the comparative analysis of business taxes in the sample of countries, I assessed descriptive statistics, such as the average, standard squared root deviation, variance coefficient and growth rate in order to verify the hypothesis stating that effective tax rates follow certain patterns, values are relatively homogeneous across businesses notwithstanding its specifics and size
Results I debunked the hypothesis of the declining trend in the effective income tax rate. Reviewing the tax burden in terms of business size, the differentiated effective tax rate hypothesis were tested. Small businesses in Russia were noted to bear a serious tax burden as compared with other countries of Europe, where higher effective rates of income tax apply to large businesses. Computations did not corroborated the assumption that the tax burden may have the sectoral specifics and distinctions.
Conclusions and Relevance The findings can raise an alert concerning the high tax burden of small businesses in Russia by providing benchmarks of business taxes in other advanced economies. The findings can be used to describe national taxation models.

Keywords: effective tax rate, tax burden, income tax, business taxation


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