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Does government support promote SME tax payments? New evidence from Vietnam

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  • Huong, Vu Van
  • Cuong, Ly Kim

Abstract

This paper examines whether governments can benefit from their support for firms by increasing firms’ tax compliance. With a panel dataset built from four small and medium-sized enterprise surveys conducted in Vietnam (from 2009 to 2015), we use fixed-effect instrumental variable estimations to empirically test the effect of government support on tax payment. We find that government financial support has a positive effect on total tax payments. Our results reflect the positive effect of government support on firm profitability and innovative activities. This study helps tax authorities to develop more effective strategies for increasing taxpayer compliance.

Suggested Citation

  • Huong, Vu Van & Cuong, Ly Kim, 2019. "Does government support promote SME tax payments? New evidence from Vietnam," Finance Research Letters, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:finlet:v:31:y:2019:i:c:s1544612318306159
    DOI: 10.1016/j.frl.2018.11.017
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    Cited by:

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    2. Nguyen, Thanh Quy & Nguyen, Anh Thuy & Tran, Anh Lan & Le, Hung Thai & Le, Ha Hoang Thi & Vu, Lien Phuong, 2021. "Do workers benefit from on-the-job training? New evidence from matched employer-employee data," Finance Research Letters, Elsevier, vol. 40(C).
    3. Minh, Thanh Nguyen & Kim, Van Pham Thi & Ngoc, Anh Mai, 2021. "Political connections, government support and SME tax payments: A note from fixed-effect quantile regression," Finance Research Letters, Elsevier, vol. 40(C).
    4. Anh Do, Vu Phuong & Bui, Quang Tuyen, 2022. "The influence of leadership personality on profitability and firm investment in human capital: The case of Vietnamese SMEs," Finance Research Letters, Elsevier, vol. 47(PA).
    5. Olakunle Jayeola & Shafie Sidek & Azmawani Abd Rahman & Anuar Shar Bali Mahomed & Hu Jimin, 2020. "Contextual Factors and Strategic Consequences of Cloud Enterprise Resource Planning (ERP) Adoption in Malaysian Manufacturing SMEs: A Conceptual Framework," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 176-201.
    6. Cuong, Ly Kim & Hau, Hoang Tran, 2021. "Does innovation promote access to informal loans? Evidence from a transitional economy," Finance Research Letters, Elsevier, vol. 40(C).
    7. Vu, Quang & Nga, Nguyen Thi Thuy, 2022. "Does the implementation of internal controls promote firm profitability? Evidence from private Vietnamese small- and medium-sized enterprises (SMEs)," Finance Research Letters, Elsevier, vol. 45(C).
    8. Do, Tien Kim Thi & Van Vu, Huong, 2021. "Does formalization increase firm investment in human capital? New evidence from Vietnam," Finance Research Letters, Elsevier, vol. 42(C).
    9. Minh, Thanh Nguyen & Ngoc, Anh Mai & Tuan, Anh Nguyen & Dao, Tung Nguyen, 2022. "Corporate social responsibility, market rivalry and firm leverage: new evidence from a fixed-effect quantile regression approach," Finance Research Letters, Elsevier, vol. 47(PB).

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    More about this item

    Keywords

    Government support; Small- and medium-sized enterprise; Tax payment;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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