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Firm Take-Up of a Corporate Income Tax Cut: Evidence from Vietnam

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  • Anh Pham

Abstract

This paper examines whether and why a sizable portion of eligible firms in Vietnam did not claim a 30-percent temporary corporate income tax reduction, part of a stimulus package to boost the economy during the Global Financial Crisis. Using census firm-level panel data supplemented with survey data collected for this study, I find that only 40–60 percent of eligible firms claimed the tax cut. This low take-up rate is surprising in the context of under-reporting behavior in which businesses try in many ways to reduce their tax liability. Using a difference-in-differences approach with firm-level fixed effects, I find that nonclaiming firms were either not aware of the policy or were afraid of a tax audit. The government’s policy may have boosted the economy by more had more firms known they could qualify for a tax cut.

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  • Anh Pham, 2019. "Firm Take-Up of a Corporate Income Tax Cut: Evidence from Vietnam," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(3), pages 575-598, September.
    • Handle: RePEc:ntj:journl:v:72:y:2019:i:3:p:575-598
    DOI: 10.17310/ntj.2019.3.04
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    Cited by:

    1. Kaoru Hosono & Masaki Hotei & Daisuke Miyakawa, 2023. "Causal effects of a tax incentive on SME capital investment," Small Business Economics, Springer, vol. 61(2), pages 539-557, August.
    2. ORIHARA Masanori & SUZUKI Takafumi, 2021. "Windfalls? Costs and Benefits of Investment Tax Incentives due to Financial Constraints," Discussion papers 21087, Research Institute of Economy, Trade and Industry (RIETI).

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