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Effective Tax Rates and Firm Size

Author

Listed:
  • Pierre Bachas

    (ESSEC Business School and World Bank Research)

  • Anne Brockmeyer

    (IFS, UCL, World Bank and CEPR)

  • Roel Dom
  • Camille Semelet

    (University of Munich, ifo Institute and World Bank)

Abstract

This paper provides novel evidence on the relationship between firm size and effective corporate tax rates using full-population administrative tax data from 13 countries. In all countries, small firms face lower effective tax rates than mid-sized firms due to reduced statutory tax rates and a higher propensity to register losses. In most countries, effective tax rates fall for the largest firms due to the take-up of tax incentives. As a result, a third of the top 1 percent of firms face effective tax rates below the global minimum tax of 15 percent. The minimum tax could raise corporate tax revenue by 27 percent in the median sample country.

Suggested Citation

  • Pierre Bachas & Anne Brockmeyer & Roel Dom & Camille Semelet, 2023. "Effective Tax Rates and Firm Size," Working Papers 014, EU Tax Observatory.
    • Handle: RePEc:dbp:wpaper:014
    as

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    File URL: https://www.taxobservatory.eu//www-site/uploads/2023/03/EUTO_WP14_Effective-Taxes_202303.pdf
    File Function: Full working paper
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    References listed on IDEAS

    as
    1. Marco Carreras & Purnachandar Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series 162, World Institute for Development Economic Research (UNU-WIDER).
    2. Marco Carreras & Chandu Dachapalli & Giulia Mascagni, 2017. "Effective corporate tax burden and firm size in South Africa: A firm-level analysis," WIDER Working Paper Series wp-2017-162, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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