Original scientific paper
https://doi.org/10.17818/DIEM/2021/1.1
THE IMPACT OF FISCAL DETERMINANTS ON INVESTMENTS IN EUROPEAN UNION COUNTRIES. A PANEL DATA ANALYSIS
Sandra Clement
orcid.org/0000-0001-9228-4204
; Faculty of Economics and Business Administration, Babeș-Bolyai University, Cluj Napoca, Romania
Eugenia Ramona Mara
orcid.org/0000-0001-9509-9610
; Faculty of Economics and Business Administration, Babeș-Bolyai University, Cluj Napoca, Romania
Monica-Violeta Achim
; Faculty of Economics and Business Administration, Babeș-Bolyai University, Cluj Napoca, Romania
Abstract
Taxation plays an important role in investment decisions and on net profit. In this view, this paper examines the fiscal determinants of investments realized by non-financial corporations in European Union (EU) countries. More exactly, the influences of profit tax and other important taxes like consumption and labor tax on the rate of investment are analysed. For this purpose, we use a panel analysis for 28 Member States from 2008 to 2018. In the presence of variables cointegration, we apply the fully modified ordinary least square (FMOLS) for investigating the long-run impact of taxation. Our results show a negative influence of the profit tax and a positive influence of consumption tax on the investment expansion. In addition, we find that the profit tax rate decreased after 2008 representing one of the most important fiscal measure adopted by the majority of EU Member States in order to stimulate the investment increase. The results are important for the governments, corporate governance of the companies and the investors, in order to understand the efficiency of their decisions to recover after a crisis.
Keywords
Corporate tax policy; Rate of investment; Panel data
Hrčak ID:
261887
URI
Publication date:
7.9.2021.
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