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Institutional environment, ownership and firm taxation

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Abstract

This paper examines how ownership type and institutional environment affect firm taxation. Using a sample of Chinese-listed firms from 1999 to 2006, we find that private firms enjoy a lower effective tax rate than local state-owned enterprises. In addition, the preferential taxation of private firms is associated with local government incentives to promote local economic growth. We find that private firms located in regions with a lower level of privatization receive preferential tax treatment. Our results also suggest that decentralization and interjurisdictional competition lead to financial interdependence between local governments and private firms.

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[Wu, Wenfeng ; Wu, Chongfeng] Shanghai Jiao Tong Univ, Antai Coll Econ & Management, Shanghai 200030, Peoples R China

[Rui, Oliver M.] China Europe Int Business Sch, Shanghai, Peoples R China


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Source

Economics of Transition

ISSN:0967-0750

Year:2013

Issue:1

Volume:21

Page:17-51

Powered by JCR@2013

ESI Discipline:ECONOMICS & BUSINESS;

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