Effects of Corporate Tax Reforms on SMEs’ Investment Decisions under the Particular Consideration of Inflation

Chang Woon Nam and Doina Radulescu

Small Business Economics, 2007, vol. 29, issue 1, 118 pages

Abstract: Corporate tax reforms carried out in EU countries since 1980 entail lower statutory tax rates and reductions in generous tax depreciation provisions. Several countries including the UK have reduced tax rates for small and medium sized enterprises (SMEs). This study compares incentive effects of such reforms on the SMEs’ investment decisions adopting a simple present value model. Ceteris paribus, tax rates and depreciation rules vary in the model simulation, while the application of historical cost accounting method in inflationary phases leads to fictitious increases in nominal net present value. Apart from the construction of international ranking, country-specific patterns of reform effects are also illustrated. Copyright Springer 2007

Keywords: corporate tax reform; EU countries; inflation; investment decision; SMEs; tax base determination; H25; H32 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Effects of Corporate Tax Reforms on SMEs’ Investment Decisions under the Particular Consideration of Inflation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:29:y:2007:i:1:p:101-118

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DOI: 10.1007/s11187-006-0003-1

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