Research On Chinese Listed Companies’ Effective Tax Burden And Influencial Factors

Enterprise Income Tax is tax imposed by the state on operational and other incomes ofenterprises and organizations within the People’s Republic of China. For government,Enterprise Income Tax is a major source of financial revenue; for enterprises, incometax burden has a direct influence on their cash flow and profit after tax.Effective Tax Burden is self-evidently important, which makes it a hot topic ofcurrent researches. Most domestic studies on Enterprise Income Tax mainly adoptqualitative method, while few quantitative studies have been carried out on this topic.This thesis draws conclusions and provides some suggestions for government to setup policies. In this thesis, relevant theories on Enterprise Effective Tax Burden havebeen reviewed and factors influencing the burden have been explored. Then the thesisconducts an empirical study based on the samples of the Chinese listed companies andfurther explores the micro and macro factors that influence Enterprise Effective TaxBurden.In the literature review part, the thesis defines the Enterprise Effective TaxBurden, clarifies the formula to calculate it by using of concept of Effective Tax Rate(hereinafter referred to as ETR). Then the thesis reviews relevant theories onEnterprise Income Tax, Tax Shifting, and Tax Incidence. From the macro perspective,the thesis analyzes how macro factors such as the implementation of the new versionLaw of Enterprise Income Tax and regional marketability affect Enterprise EffectiveTax Burden. From the micro perspective, the thesis analyzes how the company size,asset-liability ratio, proportion of fixed asset, profitability and proportion of stateownership influence the Effective Tax Burden.In the empirical study part, this thesis collects and analyzes the listed companies’Effective Tax Burden between2004and2011. It is found that the average enterpriseETR under the new version Law of Income Tax between2008and2011is higher thanthat under the old law between2004and2007. From the perspective of industry, theaverage ETR of various industries is in conformity with the policy on Preferential TaxTreatment; From the perspective of regions, the average ETR in central China ishigher than that in eastern and western China, which means that enterprise in thecentral regions are imposed with heavy Effective Tax Burden. Through a furtherregression analysis on factors influencing the Effective Tax Burden, it is found thatthe macro factors such as the implementation of the new version Law of Enterprise Income Tax and region factors have significantly influenced the ETR. Besides, microfactors such as the company size, asset-liability ratio, profitability and the proportionof the state ownership correlate significantly to ETR, while there are no strongevidences to prove the hypothesis that there is a negative correlation betweenproportion of fixed assets and ETR. The conclusions reached in this thesis can providesuggestions for government to set up tax policies and for companies to reasonablyconduct tax planning.