Modelling corporate tax liabilities using company accounts: a new framework

Saeed Ahmed

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper presents a micro-econometric approach to corporate tax modelling. Using firm level panel data of UK companies in three diverse sectors, the paper examines the impact of different variables on corporate tax liabilities of the firms. Many strong results stand out which suggest that firms reduce their tax liabilities through different channels and tax sheltering activities to maximise ‘after-tax’ profits. The evidence shows, inter alia, that not only are trading profits and capital gains important determinants of corporation tax payments but so also are their components, such as gross profit, cost of sales, expenses, and even one-off ‘exceptional items’ and ‘extraordinary items’. The results also indicate that firms’ size, organisational structure, investments, and financial and dividend policies are important factors impacting on corporate tax liabilities. Moreover, different tax reliefs and allowances are strongly associated with corporation tax payments asymmetrically. The findings have implications for microsimulation modelling, financial transparency, and corporate governance.

Keywords: Corporate income tax; panel data; corporate structure; financial and dividend policy; revenue estimation and forecasting; microsimulation modelling (search for similar items in EconPapers)
JEL-codes: C33 E17 G32 G35 H25 H32 (search for similar items in EconPapers)
Pages: 46
Date: 2004-01
New Economics Papers: this item is included in nep-cfn and nep-pbe
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://files.econ.cam.ac.uk/repec/cam/pdf/cwpe0412.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0412

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().