Is the Corporate Tax Shifted? Empirical Evidence from Asean

Parthasarathi Shome
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Parthasarathi Shome: International Monetary Fund

Public Finance Review, 1985, vol. 13, issue 1, 21-46

Abstract: The importance of the corporation income tax in overall tax revenue is as high in ASEAN member countries—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—as in selected developed countries such as the United Kingdom and the United States. This article surveys available fiscal incidence studies for ASEAN members and, after a critical evaluation of their methodologies, employs a two-sector general equilibrium model in order to study the incidence of the corporation income tax in ASEAN. It concludes that, except in Singapore, the tax is borne entirely by the owners of capital in contrast to the usual presumption that the tax is shifted. The policy implication of capital across the economy bearing the corporate tax is that double taxation of dividends—present, at least partially, in each ASEAN member—should be curtailed if these economies are to avoid the necessarily detrimental ramifications for capital formation.

Date: 1985
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:13:y:1985:i:1:p:21-46

DOI: 10.1177/109114218501300102

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