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Corporate taxation in Spain: analyzing efficiency and revenue potential

Author

Listed:
  • Manuela Ortega-Gil

    (Universidad de Cádiz)

  • Fernando Pinto

    (Universidad Rey Juan Carlos)

  • Alfredo Cabezas Ares

    (Universidad Rey Juan Carlos)

  • Isabel Rodríguez-Iglesias

    (Universidad Rey Juan Carlos)

Abstract

This paper offers a comprehensive analysis of Spain’s corporate tax system through the lens of the Laffer curve and Buoyancy index, assessing its efficiency in generating revenue. The study finds that Spain is nearing the Laffer curve’s optimal tax rate, beyond which tax revenue may decrease with rate hikes. The Buoyancy index reveals a fluctuating response of tax revenues to economic shifts, indicating vulnerability in economic downturns. We trace Spain’s corporate tax evolution, examining current structures and recent policy reforms, and explore how corporate taxation influences economic activities and investment. The paper proposes policy recommendations, including reassessing the corporate tax rate, advocating structural reforms for a wider tax base, and policies promoting economic growth. Emphasis is placed on counter-cyclical fiscal policies, regular evaluation of tax incentives, improving tax compliance, and Spain’s role in global tax coordination. This research contributes to fiscal policy discussions, advocating a balanced tax approach for sustainable economic development and guiding policymakers toward resilient fiscal strategies in a dynamic economic environment.

Suggested Citation

  • Manuela Ortega-Gil & Fernando Pinto & Alfredo Cabezas Ares & Isabel Rodríguez-Iglesias, 2024. "Corporate taxation in Spain: analyzing efficiency and revenue potential," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-8, December.
    • Handle: RePEc:pal:palcom:v:11:y:2024:i:1:d:10.1057_s41599-024-03528-x
    DOI: 10.1057/s41599-024-03528-x
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    References listed on IDEAS

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    1. Alexis Anagnostopoulos & Orhan Erem Atesagaoglu & Eva Cárceles‐Poveda, 2022. "Financing corporate tax cuts with shareholder taxes," Quantitative Economics, Econometric Society, vol. 13(1), pages 315-354, January.
    2. Lynne Oats & Penelope Tuck, 2019. "Corporate tax avoidance: is tax transparency the solution?," Accounting and Business Research, Taylor & Francis Journals, vol. 49(5), pages 565-583, July.
    3. Diptes C. P. Bhimjee, 2023. "The euro area sovereign debt crisis and the sovereign debt Laffer curve: a historic assessment for 1999–2014," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
    4. Yu Lu & Rui Liu & Yuhe Cao & Yuhan Li, 2023. "Tax Burden and Corporate Investment Efficiency," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    5. Ziyang Yue & Gangqiang Yang & Haisen Wang, 2023. "How do tax reductions motivate technological innovation?," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-18, December.
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