Changes In Corporate Income Tax Rate And Corporate Tax Avoidance

Fiscal revenue is an important guarantee for the government to perform public functions,and tax revenue is the most important part of fiscal revenue.The corporate income tax is a kind of direct tax.Its revenue is the second largest part among the tax revenue,which the value-added tax ranks first.Corporate income tax plays an important role in the development of enterprises and affects the tax burden and tax avoidance of enterprises.Despite numerous preferential tax policies,companies still report they are under the pressure of heavy taxes and high costs.At the current central economic work conference,the central government repeatedly stressed the importance of continuing to implement a proactive fiscal policy,improving structural tax reduction,and creating a level playing field.At present,China's tax reduction policies mainly focus on the rate of value-added tax,while the tax rate of corporate income tax has not been adjusted.So,scholars call for an appropriate reduction of the tax rate of enterprise income tax.Then,what is the impact of lowering corporate income tax rate have on corporate tax avoidance activities? This is a major issue that needs to be studied at present.Based on the research background of China's corporate income tax reform in 2008,and under the different circumstances of tax rate increase,tax rate unchanged and tax rate decline,this paper studies the impact of corporate income tax rate changes on corporate tax avoidance activitiesThrough combing the existing literature,this paper discusses the overall impact of corporate income tax rate changes on corporate tax avoidance from the perspective of theoretical analysis,then analyzes the heterogeneity of different individual characteristics of enterprises and puts forward five hypotheses.Hypothesis 1: The increase of corporate income tax rate promotes the degree of tax avoidance of enterprises.The decline of corporate income tax rate reduces the degree of corporate tax avoidance.Hypothesis 2: Compared with state-owned enterprises,the impact of changes in corporate income tax rate on tax avoidance activities of non-state-owned enterprises will be greater.Hypothesis 3: The impact of changes in corporate income tax rate on corporate tax avoidance may be different in enterprises with different intensity of tax collection and management.Hypothesis 4: The influence of changes in corporate income tax rate on corporate tax avoidance activities may be different in enterprises with different liquidity.Hypothesis 5: The influence of changes in corporate income tax rates on corporate tax avoidance activities may vary among enterprises with different financing constraints.In the empirical test part,this paper uses the panel data of China's A-share listed companies from 2003 to 2011,and takes the 2008 corporate income tax reform as a quasi-natural experiment,and constructs the dual difference model.The theoretical hypothesis was tested with the constant tax rate enterprises as the control group,and the tax rate increased and declined as the experimental group.And the dynamic effect,heterogeneity analysis and robustness test were extended.The results show that:(1)On the whole,the decline of corporate income tax rate weakens the tax avoidance motivation of enterprises,while the increase of tax rate does not significantly promote the tax avoidance activities of enterprises.(2)From a dynamic perspective,the increase in the corporate income tax rate only enhanced the tax avoidance motivation of enterprises in 2008;The effect of lower corporate income tax rates on the extent of corporate tax avoidance has continued.(3)The impact of changes in corporate income tax rate on tax avoidance activities of non-state-owned enterprises will be greater than that of state-owned enterprises.(4)The decline of corporate income tax rate has significantly reduced the degree of corporate tax avoidance in areas where the intensity of tax collection and administration is strong.(5)The influence of corporate income tax rate changes on the tax avoidance of enterprises with different liquidity should be further discussed in combination with the intensity of tax collection and management in different regions.When enterprises are characterized by weak liquidity and in a strong tax collection and management environment,tax rate rise does not increase their tax avoidance activities,but plays a restraining role.The decline of tax rate has significantly reduced the tax avoidance activities of more liquid enterprises.(6)Compared with enterprises with strong financing constraints,tax rate reduction makes enterprises with weak financing constraints have weaker tax avoidance incentives.The conclusion of this paper provides new micro evidence for the change of tax avoidance activities of enterprises under the background of tax reduction.The enlightenment of the above research are as follows: First,the decline of corporate income tax rate reduces corporate tax avoidance and is sustainable.Therefore,government should continue to give full play to the positive impact of tax reduction policies on enterprises,and support targeted tax preferential policies so that enterprises can enjoy the dividends brought by tax reduction and fee reduction to a greater extent.When conditions are ripe,the enterprise income tax rate should be lowered appropriately,and the adjustment of macro policies should be controlled scientifically and stably to enhance the vitality of micro subjects.Second,in terms of policies,government can give appropriate preference to non-state-owned enterprises,increase tax cuts,substantially reduce their tax burden,enhance their sense of gain and support their development.Third,the adjustment of tax policies should also combine with investment,employment,industry and regional policies to activate the development potential of enterprises and thus promote higher-quality economic development.