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Economic policy uncertainty, tax quotas and corporate tax burden: Evidence from China

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  • Dang, Dandan
  • Fang, Hongsheng
  • He, Minyuan

Abstract

This paper studies how economic policy uncertainty affects corporate tax burden. We show that economic policy uncertainty is positively related to corporate tax burden, and the effect is stronger when the tax quotas are higher. Furthermore, we find that economic policy uncertainty strengthens tax collection by increasing government fiscal pressure, thereby increasing corporate tax burden. Besides, the effects of economic policy uncertainty on corporate tax burden are primarily significant in state-owned enterprises (SOEs), non-high-tech firms, firms from the eastern areas and service industry firms. The evidence illustrates that keeping the transparency and stability of economic policies helps to cut tax burden effectively.

Suggested Citation

  • Dang, Dandan & Fang, Hongsheng & He, Minyuan, 2019. "Economic policy uncertainty, tax quotas and corporate tax burden: Evidence from China," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    • Handle: RePEc:eee:chieco:v:56:y:2019:i:c:6
    DOI: 10.1016/j.chieco.2019.101303
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