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The Neutrality Of Taxation Of Investment Projects In Serbia

Author

Listed:
  • Stevan Luković
  • Stefan Vržina
  • Milka Grbić
  • Miloš Pjanić

Abstract

The paper analyses the neutrality of taxation of investment projects on the example of Serbia. The aim of the research is to confirm/reject the existence of uniformity of the tax burden on investment projects that differ regarding the asset type, industry and the source of finance. The uniformity of tax burden, that is, the absence of discrimination and distortive effects of taxation, may be considered a confirmation of the tax neutrality. To investigate neutrality of taxation the analysis employed King-Fullerton framework of calculating effective marginal tax rates. The research results show that the tax treatment of investment projects in Serbia is nondiscriminatory. Marginal effective tax rates for different types of investment projects do not vary widely; that is, there are no investment projects that have a markedly favourable (unfavourable) tax treatment compared to the other types of investment projects.

Suggested Citation

  • Stevan Luković & Stefan Vržina & Milka Grbić & Miloš Pjanić, 2021. "The Neutrality Of Taxation Of Investment Projects In Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(230), pages 101-134, July – Se.
    • Handle: RePEc:beo:journl:v:66:y:2021:i:230:p:101-134
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    References listed on IDEAS

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    1. Gale, William G. & Orszag, Peter R., 2005. "Deficits, Interest Rates, and the User Cost of Capital: A Reconsideration of the Effects of Tax Policy on Investment," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(3), pages 409-426, September.
    2. Mervyn A. King, 1974. "Taxation and the Cost of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(1), pages 21-35.
    3. European Commission, 2001. "Company Taxation in the Internal Market," Taxation Studies 0005, Directorate General Taxation and Customs Union, European Commission.
    4. Don Fullerton, 1983. "Which Effective Tax Rate?," NBER Working Papers 1123, National Bureau of Economic Research, Inc.
    5. Aloísio Flavio Ferreira de Almeida & Nelson Leitão Paes, 2013. "The influence of interest on net equity and interest rates on tax neutrality – a case study of the Brazilian corporate taxation," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 14(3–4), pages 185-198.
    6. Johansson Dan & Stenkula Mikael & Wykman Niklas, 2020. "The Taxation of Industrial Foundations in Sweden (1862–2018)," Nordic Tax Journal, Sciendo, vol. 2020(1), pages 1-14, January.
    7. Nemanja Karapavlović & Vladimir Obradović & Jasmina Bogićević, 2020. "The Use Of Historical Cost And Fair Value For Property And Plant And Equipment Measurement – Evidence From The Republic Of Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(227), pages 95-118, October –.
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    Cited by:

    1. Mladen Stamenković, 2023. "Where Did All The Papers Go? A Bibliometric Overview Of Publications In Economics From Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 29-50, January –.

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    More about this item

    Keywords

    Investment decision making; tax burden; tax neutrality; marginal effective tax rate;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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