An Empirical Study On The Relationship Between Effective Tax Rate And Statutory Tax Rate

Nowadays, more and more companies consider the importance of tax, and tax has been closely linked with the various activities in the companies and been one of the important factors considered in the process of continuous expansion and development. Many companies put effective tax rate as an important indicator when they consider the corporate performance, therefore, they pay more attention on the size of the companies bearing the tax, thus it is necessary to computer the actual tax burden and analyze the factors that affect it.In order to promote the development of economy more rapidly and healthily, Country publishes new income tax laws and regulations continuously. Country adopts different tax laws in different regions and companies in different industries, in order to coordinate the local economic development in different places, which directly cause the differences in the effective tax rate ,but sometimes there is no clear relationship between them.As we know, there are differences between corporate income tax and accounting, which cause the effective tax rate being inconsistent with the statutory tax rate. This research focuses on how the effective tax rate changes when the statutory tax rate changes which include both rising and falling cases. This paper focuses on the relationship between the statutory tax rate and the effective tax rate, that is to say, whether the company's actual tax burden falls when the statutory income tax rate falls, and if it falls whether the degree of declining is significant; whether the company's actual tax burden rises when the statutory rate rises, if it rises whether the degree of rising is significant.The research take the statutory tax rate as a explanatory variable in calculating the effective tax rate, at the same time, in order to analyze it comprehensively, we also consider other controlling variables such as firm size, financial leverage, ownership structure and profitability. Finally, in order to make the conclusion more convincing and comprehensive , we test the stability of it by selecting some other methods of calculating the effective tax rate.