Income tax liability for large corporations in China: 1998‐2007

Abstract

Purpose -The purpose of this paper is to examine long-term income tax liability for Chinese public corporations from 1998 to 2007. It also studies the factors that are associated with Chinese firms' long-run effective tax rates. Design/methodology/approach -The paper uses the measurement of long-run effective tax rate, developed by Dyreng et al., which is measured as the sum of taxes paid over ten years divided by the sum of pretax book income over those same ten years. This paper is an empirical study using the financial report data collected from China stock market financial statement database and corporate ownership structure change from SINA Finance database. The tests include both univariate and multivariate tests. Findings -The paper's findings are: ten-year effective tax rates are considerably lower than the statutory tax rate; ten-year effective tax rates vary significantly across industries and geographic areas; profitability, firm size, capital structure, and capital intensity are all associated with ten-year effective tax rates; corporate ownership structures, i.e. tradable vs non-tradable shares, are related to ten-year effective tax rates. Research limitations/implications -Given that corporate ownership has changed dramatically in China in recent years, future studies should be conducted to explore the association between effective tax rates and ownership changes. Practical implications -The paper is of interest to the policy makers, corporate managements, and academics, who seek to examine corporate income tax burden and the factors associated with tax rates over the long term. Given that corporate ownership has changed dramatically in China in recent year, future studies should be conducted to explore the association between effective tax rates and ownership changes. Originality/value -The paper differs from Dyreng et al.'s paper in 2007. While Dyreng et al. conduct a univariate analysis on the association between firm characteristics and long-run effective tax rates, this paper employs multivariate regression models to examine what factors are associated with long-run effective tax rates. Second, this paper examines the relationship between corporate ownerships and effective tax rates.

Earning Quality and Tax Planning: Evidence on Indonesia Listed Company

“…The size of the company has no effect on earnings quality as we see on Table 4, this study reject the research of Hassan (2012) and Zeng (2010) which states that firm size affect earnings quality because even though the company has a large total assets and is classified as a company with a large company size, easily possessing funding source assets and having a good level of financial performance does not necessarily guarantee that the quality of the profits generated good quality. Large corporate profits usually settle in major posts such as inventory and merchandise, so that it looks to have high profits but has not guaranteed the quality of profits generated because the profit generated is still in the form of inventory and receivables that have not been received in cash.…”

“…Some research showed that a company has a large total assets and is classified as a large-sized company that easily has access to funding sources and has a good level of financial performance, but it is not necessarily guarantee that the quality generated is high. This is because the company is relatively large as well, because the infrastructure of large companies, the costs incurred for operations are also large (Dyreng & Markle, 2016;Zeng, 2010). Then the profits of large companies usually settle on the main posts such as inventory and merchandise so that they appear to have high profits but have not guaranteed the quality of profits generated because the profits generated are still in the form of inventory and receivables that have not been received in cash (Hassan, 2012).…”

Tax Loss Amortization of Companies in Slovakia

“…Looking at the period of 2016 or 2017, it is possible to assume that the development agrees with the economic theory. A similar relation is stated in the findings of Zeng (2010) or Dyreng et al (2008). Zeng (2010) researched a long-term income tax liability for Chinese public corporations.…”

Determination Causes of Tax Avoidance on Indonesian Manufacturing Firms with Capital Intensity as Intervening Variables

“…This results in tax avoidance by companies by utilizing their assets which can be calculated by the capital intensity ratio (Amanah et al, 2014;Luqman & Shahzad, 2012). Based on previous research conducted by Mills et al, (1998b) and Zeng (2010) it is concluded that capital intensity can positively and significantly affect tax avoidance. H4: ROA has a negative and significant effect on tax avoidance with capital intensity as intervening variable.…”