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Income tax liability for large corporations in China: 1998-2007


  • Tao Zeng


Purpose - The purpose of this paper is to examine long-term income tax liability for Chinese public corporations from 1998 to 2007. It also studies the factors that are associated with Chinese firms' long-run effective tax rates. Design/methodology/approach - The paper uses the measurement of long-run effective tax rate, developed by Dyreng Findings - The paper's findings are: ten-year effective tax rates are considerably lower than the statutory tax rate; ten-year effective tax rates vary significantly across industries and geographic areas; profitability, firm size, capital structure, and capital intensity are all associated with ten-year effective tax rates; corporate ownership structures, i.e. tradable vs non-tradable shares, are related to ten-year effective tax rates. Research limitations/implications - Given that corporate ownership has changed dramatically in China in recent years, future studies should be conducted to explore the association between effective tax rates and ownership changes. Practical implications - The paper is of interest to the policy makers, corporate managements, and academics, who seek to examine corporate income tax burden and the factors associated with tax rates over the long term. Given that corporate ownership has changed dramatically in China in recent year, future studies should be conducted to explore the association between effective tax rates and ownership changes. Originality/value - The paper differs from Dyreng

Suggested Citation

  • Tao Zeng, 2010. "Income tax liability for large corporations in China: 1998-2007," Asian Review of Accounting, Emerald Group Publishing, vol. 18(3), pages 180-196, September.
  • Handle: RePEc:eme:arapps:v:18:y:2010:i:3:p:180-196

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    References listed on IDEAS

    1. Plesko, George A., 2003. "An evaluation of alternative measures of corporate tax rates," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 201-226, June.
    2. Shackelford, Douglas A. & Shevlin, Terry, 2001. "Empirical tax research in accounting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 321-387, September.
    3. Gupta, Sanjay & Newberry, Kaye, 1997. "Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data," Journal of Accounting and Public Policy, Elsevier, vol. 16(1), pages 1-34.
    4. Don Fullerton, 1983. "Which Effective Tax Rate?," NBER Working Papers 1123, National Bureau of Economic Research, Inc.
    5. Martin Feldstein & Lawrence Summers, 1983. "Inflation and the Taxation of Capital Income in the Corporate Sector," NBER Chapters,in: Inflation, Tax Rules, and Capital Formation, pages 116-152 National Bureau of Economic Research, Inc.
    6. Aarbu, Karl Ove & MacKie-Mason, Jeffrey K, 2003. "Explaining Underutilization of Tax Depreciation Deductions: Empirical Evidence from Norway," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(3), pages 229-257, May.
    7. Bahl, Roy W. & Bird, Richard M., 2008. "Tax Policy in Developing Countries: Looking Back—and Forward," National Tax Journal, National Tax Association, vol. 61(2), pages 279-301, June.
    8. Lammersen, Lothar, 2002. "The Measurement of Effective Tax Rates: Common Themes in Business Management and Economics," ZEW Discussion Papers 02-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Roger Gordon & Laura Kalambokidis & Joel Slemrod, 2003. "A New Summary Measure of the Effective Tax Rate on Investment," NBER Working Papers 9535, National Bureau of Economic Research, Inc.
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