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Determinants of the Effective Tax Rate

Author

Listed:
  • Radu CIOBANU

    (Bucharest University of Economic Studies)

  • Adriana Florina POPA

    (Bucharest University of Economic Studies)

  • Daniela-Nicoleta SAHLIAN

    (Bucharest University of Economic Studies)

Abstract

The effective tax rate has become a relevant indicator following the implementation of Council Directive (EU) 2022/2523 issued on 14 December 2022, which aims to ensure a global minimum level of taxation for multinational enterprise groups and large domestic groups in the European Union. The effective rate can be influenced by several key economic factors when companies compile their tax strategy. Our results show that inventory intensity, R&D expenditure, economic return, financial return, and reinvestment rate have a negative impact on the effective tax rate. In contrast, financial leverage and company size exhibited a positive impact.

Suggested Citation

  • Radu CIOBANU & Adriana Florina POPA & Daniela-Nicoleta SAHLIAN, 2024. "Determinants of the Effective Tax Rate," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 5(8), pages 40-45, August.
    • Handle: RePEc:ahd:journl:v:5:y:2024:i:8:p:40-45
    DOI: 10.37945/cbr.2024.08.05
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    More about this item

    Keywords

    Directive 2022/2523; effective tax rate; company profit; IT sector;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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