A Study on the Difference of Effective Tax Rates in China:Based on the Decomposition of the Annual Reports Notes Data
This paper analyzes the factors contributing to the difference of effective corporate in-come tax rates based on the annual reports notes data of listed companies.The findings are as fol-lows.First,in recent years,there has been a continuous introduction of preferential corporate in-come tax cut policies,with a notable increase in base-related reductions.Second,as the scale of preferences expands,the effective tax rates of firms generally decrease,but the differences in tax burdens among firms widen.Third,statutory factors related to tax laws play a crucial role in the difference of effective tax rates,where the applicable tax rate is the key determinant of a firm's effective tax rates,and temporary differences in the tax base adjustments are the primary source of variation in effective tax rates.The paper emphasizes that future tax policies should focus more on the trade-off between efficiency and equity,taking into account the differences in firms'cogni-tive abilities,and that the tax system design should avoid being overly complex and fragmented.
corporate income taxeffective tax ratevariance decompositiontax system design
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