Working Paper: CEPR ID: DP17985
Authors: Pierre Bachas; Anne Brockmeyer; Roel Dom; Camille Semelet
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.
Keywords: firm size; tax incentives; global minimum tax; corporate effective tax rate
JEL Codes: H25; H87; O23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tax incentives (H20) | Effective tax rates (ETRs) (H26) |
| Firm size (L25) | Effective tax rates (ETRs) (H26) |
| Takeup of tax incentives (H26) | Effective tax rates (ETRs) for largest firms (H32) |
| Exemptions from tax base (H20) | Effective tax rates (ETRs) for largest firms (H32) |
| Tax credits (H29) | Effective tax rates (ETRs) for largest firms (H32) |
| Global minimum tax (F38) | Corporate tax revenue (H20) |