Investors´ decision on the context of the effective taxation of agricultural companies
DOI:
https://doi.org/10.5219/1223Keywords:
tax, effectiveness, company, asset, agricultureAbstract
The analysis of the effective taxation combines two different effective tax rates which are crucial for placement and monitoring of the investment amount in the particular country. Both of these tax rates are important for investors who make a decision on the benefits, as well as the risks of corporate taxation in the country. The contribution deals with the problem of the effective taxation through effective average tax rates (EATR) and effective marginal tax rates (EMTR). Especially, it focuses on agricultural production companies. The effectivity of taxation was observed for selected intangible and tangible assets for a period of 2004 and 2018. Our analysis evaluated the influence of the change in the statutory tax rates (and the other taxes and indicators, as well) on the change in effective average tax rates on capital in the agricultural companies. Based on the results, the lowest EATR, ranging from 20.79% to 25.25%, reported agricultural lands in both reference periods and for both ways of financing. Analyzing EMTR we found out that the lowest value reported investments in intangible assets that have crucial significance for investors. Our results definitely made it clear that in the EATR ↔ EMTR relationship, a form of financing investments is decisive. This relationship is used when an investor decides between several mutually exclusive locations or types of investment in a given country. In equity financing, the most effective capital is investing in intangible assets, and when we consider financing from external sources it is investment into stocks. An increase in the statutory tax rate of 2% resulted in a 12% increase in effective average tax rates.
Downloads
Metrics
References
The Law no. 595/2003 of Col. of Slovak Republic. Income Tax Law
Andersen, F. G., Asheim, L. J., Mittenzwei, K., Veggeland, F. 2002. Taxation of Agriculture in selected countries. Study of The United States, Canada, Australia, Germany, United Kingdom, Ireland, France, Switzerland and Italy with relevance to the WTO. Norsk institutt for landbruksøkonomisk forskning.
Arachi, G., Biagi, F. 2005. Taxation, Cost of Capital and Investment: Do Tax Asymmetries Matter?. Giornale degli Economisti, vol. 64, no. 2-3, p. 295-322.
Auerbach, A. J. 1979. Wealth maximization and the cost of capital. The Quarterly Journal of Economics, vol. 93, no. 3, p. 433-446. https://doi.org/10.3386/w0254 DOI: https://doi.org/10.2307/1883167
Baker, M. 1999. Survey of the Effective Tax Burden in the European Union. Report commissioned by the Ministry of Finance in the Netherlands, Hague. 300 p.
Barrios, S., Nicodème, G., Sanchez Fuentes, A. J. 2014. Effective Corporate Taxation, Tax Incidence and Tax Reforms: Evidence from OECD Countries. 64 p. ISBN 978-92-79-38371-7. Available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_45.pdf DOI: https://doi.org/10.2139/ssrn.2518381
Blechová, B. 2015. The Analysis of Dependence FDI Flows on the Size of Corporate Income Tax Rates in EU Countries. In Proc. 7th International Scientific Conference on Finance and Performance of Firms in Science, Education and Practice, p. 124-136.
Castro, G. Á., Ramírez Camarillo, D. B. 2014. Determinants of tax revenue in OECD countries over the period 2001-2011. Contaduría y administración, vol. 59, no. 3, p. 35-59. https://doi.org/10.1016/s0186-1042(14)71265-3 , DOI: https://doi.org/10.1016/S0186-1042(14)71265-3
Darabos, É. 2016. Particularity of local taxation in hungary. Acta Oeconomica Universitatis Selye, vol. 5, no. 1, p. 29-39.
De Laet, J. P., Wöhlbier, F. 2008. Tax burden by economic function. A comparison for the EU Member States. EconPapers, 33 p. Availabel at: https://mpra.ub.uni-muenchen.de/14761/1/MPRA_paper_14761.pdf
Devereux, M. P., Griffith, R. 1998. The Taxation of Discrete Investment Choices. Revision 2. The Institute for Fiscal Studies, Working Paper Series W98/16. 57 p. https://doi.org/10.1920/wp.ifs.1998.9816 DOI: https://doi.org/10.1920/wp.ifs.1998.9816
Devereux, M. P., Griffith, R. 2003. The Impact of Corporate Taxation on the Location of Capital: A Review. Economic Analysis and Policy, vol. 33, no. 2, p. 275-292. https://doi.org/10.1016/s0313-5926(03)50021-2 DOI: https://doi.org/10.1016/S0313-5926(03)50021-2
Devereux, M. P., Griffith, R., Klemm, A. 2002. Corporate income tax reforms and international tax competition. Economic policy, vol. 17, no. 35, p. 449-495. https://doi.org/10.1111/1468-0327.00094 DOI: https://doi.org/10.1111/1468-0327.00094
Devereux, M. P., Griffith, R., Klemm, A. 2004. Why has the UK corporation tax raised so much revenue?. The Institute for Fiscal Studies, Working Paper Series WP04/04. 28 p. https://doi.org/10.1920/wp.ifs.2004.0404 DOI: https://doi.org/10.1920/wp.ifs.2004.0404
Durst, R. L., Monke, J. D. 2001. Effects of federal tax policy on agriculture. United States Department of Agriculture, Economic Research Service. Available at: https://ideas.repec.org/p/ags/uerser/33919.html
Feld, L. P., Heckemeyer, J. H. 2011. FDI and taxation: A meta‐study. Journal of economic surveys, vol. 25. no. 2, p. 233-272. https://doi.org/10.1111/j.1467-6419.2010.00674.x DOI: https://doi.org/10.1111/j.1467-6419.2010.00674.x
Felis, P. 2015. Agricultural tax fiscal efficiency in Poland. Management Theory and Studies for Rural Business and Infrastructure Development, vol. 37. no. 1, p. 38-47. https://doi.org/10.15544/mts.2015.04 DOI: https://doi.org/10.15544/mts.2015.04
Hall, R. E., Jorgenson, D. W. 1967. Tax policy and investment behavior. American economic review, vol. 57, no. 3, p. 391-414. Available at: https://www.jstor.org/stable/1812110?origin=JSTOR-pdf&seq=1
Hanlon, M., Heitzman, S. 2010. A review of tax research. Journal of Accounting and Economics, vol. 50. no. 2-3, p. 127-178. https://doi.org/10.1016/j.jacceco.2010.09.002 DOI: https://doi.org/10.1016/j.jacceco.2010.09.002
Jorgenson, D. W. 1963. Capital theory and Investment Behavior. The American Economic Review, vol. 53. no. 2, p. 247-259.
Jorgenson, D. W., Gollop, F. M. 1992. Productivity growth in US agriculture: a postwar perspective. American Journal of Agricultural Economics, vol. 74. no. 3, p. 745-750. https://doi.org/10.2307/1242588 DOI: https://doi.org/10.2307/1242588
Jorgenson, D. W., Yun, K. Y. 1991. Tax reform and the cost of capital. Great Britain, Oxford : Oxford University Press. https://doi.org/10.1093/0198285930.001.0001 DOI: https://doi.org/10.1093/0198285930.001.0001
Khan, M. H. 2005. Agricultural taxation in developing countries: a survey of issues and policy. Agricultural Economics, vol. 24. no. 3, p. 315-328. https://doi.org/10.1111/j.1574-0862.2001.tb00033.x DOI: https://doi.org/10.1111/j.1574-0862.2001.tb00033.x
King, M. A., Fullerton, D. 1985. The taxation of income from capital: A comparative study of the united states, the united kingdom, sweden, and germany. Journal of Macroeconomics, vol. 7, no. 3, 441 p. https://doi.org/10.1016/0164-0704(85)90104-1 DOI: https://doi.org/10.1016/0164-0704(85)90104-1
Ključnikov, A., Mura, L., Sklenár, D. 2019. Information security management in SMEs: factors of success. Entrepreneurship and Sustainability Issues, vol. 6. no. 4, p. 2081-2094. https://doi.org/10.9770/jesi.2019.6.4(37) DOI: https://doi.org/10.9770/jesi.2019.6.4(37)
Kubátová, A., Říhová, L. 2009. Regresní analýza faktoru ovlivňujících výnosy korporativní dane v zemích OECD. (Regression analysis of factor affecting corporate tax revenues in OECD countries). Politická ekonomie, vol. 4. p. 451-470. (In Czech) https://doi.org/10.18267/j.polek.693 DOI: https://doi.org/10.18267/j.polek.693
Kubátová, K. 2011. Úloha veřejných financí v řešení problémů a dopadů současné krize. (The role of public finances in solving the problems and impacts of the current crisis). 1.st ed., 16 p. (In Czech).
Martín-Mayorales, F., Uribe, C. A. 2010. Determinantes económicos e institucionales del esfuerzo fiscal en América Latina (Economic and institutional determinants of the fiscal effort in Latin America). Investigación económica, vol. 69. no. 273, p. 85-113. (In Spanish) https://doi.org/10.22201/fe.01851667p.2010.273.24251 DOI: https://doi.org/10.22201/fe.01851667p.2010.273.24251
McKenzie, K. J., Mintz, J. M., Scharf, K. A. 1997. Measuring effective tax rates in the presence of multiple inputs: a production based approach. International Tax and Public Finance, vol. 4, p. 337-359. https://doi.org/10.1023/A:1008620522432 DOI: https://doi.org/10.1023/A:1008620522432
Mura, L., Daňová, M., Vavrek, R., Dúbravská, M. 2017. Economic freedom – classification of its level and impact on the economic security. AD ALTA:Journal of Interdisciplinary Research, vol. 7, no. 2, p. 154-157.
OECD. 1991. Development Committee on Fiscal Affairs. Working Party No. 2 on Tax Analysis and Tax Statistics. Taxing profits in a global economy: domestic and international issues, vol. 18. Paris, France : OECD. 470 p.
Okanazu, O. O. 2018. Financial management decision practices for ensuring business solvency by small and medium scale enterprises. Acta Oeconomica Universitatis Selye, vol. 7. no. 2, p. 109-121.
Severini, S., Tantari, A., Rocchi, B. 2014. The taxation of farm income in Italy. Evidences from the EU-SILC database. In 3 rd AIEAA Conference - Feeding the Planet and Greening Agriculture. p. 12.
Vegh, C. A., Vuletin, G. 2012. How is tax policy conducted over the business cycle?. American Economic Journal: Economic Policy, vol. 7, no. 3, p. 327-370. https://doi.org/10.3386/w17753 DOI: https://doi.org/10.1257/pol.20120218
Vítek, P. 2011. Ekonomická analýza daňových nástrojov. (Economic analysis of tax instruments). In Medveď, J. et.al. Verejné financie. Bratislava : Sprint, 640 p. (In Slovak) ISBN 978-80-89393-46-6.
ZEW. 2018. Effective Tax Levels Using Devereux/Griffith Methodology. Project for the EU Commission. TAXUD/2013/CC/120. 3601 p. Available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/final_report_2017_effective_tax_levels_revised_en.pdf
Published
How to Cite
Issue
Section
License
This license permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.
