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Effective Corporate Income Tax Rate In Romania: A Micro-Backward Looking Approach

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  • Sebastian Lazar

    (University Al. I. Cuza of Iasi, Faculty of Economics and Business Administration)

Abstract

Within the framework of micro-backward looking methodology, the paper computes the effective corporate income tax rate for Bucharest Stock Exchange non-financial companies for 2000 - 2009 period, using data from companies financial reports. We find that effective tax rate computed as profit tax/pre-tax income ratio was below the statutory tax rate, throughout the period, except for the year 2009 (when an alternative minimum tax was introduced) and the differences have diminished since the flat tax was adopted (2005). When applying a correlation analysis, we find that the difference between this effective tax rate and the statutory tax rate presents a strong negative correlation with the return on assets ratio (ROA). Also, we have find that commerce is enjoying the most favourable tax regime, while energy is the most heavily taxed.

Suggested Citation

  • Sebastian Lazar, 2011. "Effective Corporate Income Tax Rate In Romania: A Micro-Backward Looking Approach," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 361-366, December.
    • Handle: RePEc:ora:journl:v:1:y:2011:i:2:p:361-366
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    File URL: http://anale.steconomiceuoradea.ro/volume/2011/n2/048.pdf
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    References listed on IDEAS

    as
    1. Devereux, Michael P & Griffith, Rachel, 2003. "Evaluating Tax Policy for Location Decisions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(2), pages 107-126, March.
    2. Devereux, Michael P. & Elschner, Christina & Endres, Dieter & Spengel, Christoph, 2009. "Effective tax levels using the Devereux Griffith methodology: Project for the EU Commission TAXUD/2008/CC/099. Report 2009," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110503.
    3. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    4. Julie Collins & Douglas Shackelford, 1995. "Corporate domicile and average effective tax rates: The cases of Canada, Japan, the United Kingdom, and the United States," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 55-83, February.
    5. European Commission, 2001. "Company Taxation in the Internal Market," Taxation Studies 0005, Directorate General Taxation and Customs Union, European Commission.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    effective corporate income tax rate; backward looking methodology;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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