Firm take-up of a corporate income tax cut evidence from Vietnam Anh Pham
By: Pham, Anh
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Material type: 
ArticlePublisher: 2019Subject(s): SOCIEDADES | IMPUESTOS | REDUCCIONES TRIBUTARIAS | EVASION FISCAL | ELUSION FISCAL | VIETNAM | ANÁLISIS DE REGRESIÓN
In:
National Tax Journal v. 72, n. 3, September 2019, p. 575-598Summary: This paper examines whether and why a sizable portion of eligible firms in Vietnam did not claim a 30-percent temporary corporate income tax reduction, part of a stimulus package to boost the economy during the Global Financial Crisis. Using census firm-level panel data supplemented with survey data collected for this study, I find that only 40–60 percent of eligible firms claimed the tax cut. This low take-up rate is surprising in the context of under-reporting behavior in which businesses try in many ways to reduce their tax liability. Using a difference-in-differences approach with firm-level fixed effects, I find that nonclaiming firms were either not aware of the policy or were afraid of a tax audit. The government’s policy may have boosted the economy by more had more firms known they could qualify for a tax cut.
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| OP 233/2019/3-1 Deterring property tax delinquency in Philadelphia | OP 233/2019/3-2 The effects of required minimun distribution rules on withdrawals from traditional IRAs | OP 233/2019/3-3 Rules versus home rule | OP 233/2019/3-4 Firm take-up of a corporate income tax cut | OP 233/2019/3-5 Tariff incidence | OP 233/2019/3-6 Earned income tax credits and infant health | OP 233/2019/4 National Tax Journal |
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This paper examines whether and why a sizable portion of eligible firms in Vietnam did not claim a 30-percent temporary corporate income tax reduction, part of a stimulus package to boost the economy during the Global Financial Crisis. Using census firm-level panel data supplemented with survey data collected for this study, I find that only 40–60 percent of eligible firms claimed the tax cut. This low take-up rate is surprising in the context of under-reporting behavior in which businesses try in many ways to reduce their tax liability. Using a difference-in-differences approach with firm-level fixed effects, I find that nonclaiming firms were either not aware of the policy or were afraid of a tax audit. The government’s policy may have boosted the economy by more had more firms known they could qualify for a tax cut.
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