The Determinants of the Tax Burden: The Case of Ecuadorian companies
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Abstract
Previous studies have shown that factors such as the size of the company, the leverage, investment decisions, and the ownership structure influence the tax burden borne by companies. In this study, we analyzed the determinants of the tax burden of Ecuadorian companies, for which a sample of 27 877 firms were selected in the 2014-2017 period. As a proxy of the tax burden it was selected the effective tax rate. We analyzed how the size of the company, the leverage, the investment decisions, the profitability and operations abroad can affect the effective tax rate. The results shown that the effective tax rate has a negative relationship with the variable size, supporting the theory of political power, that is, that larger companies have less fiscal pressure, likewise it was observed that the variable profitability had a negative and significant relationship with the effective tax rate indicating that companies with higher profitability bear less tax burden. On the other hand, there is evidence that of a positive relationship with the variable leverage, which means that the most leveraged companies support a greater fiscal pressure. The variables capital intensity, inventory intensity and operations abroad are not significant, so it can be concluded that they are not determinants of the tax burden.
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