The effect of corporate tax on private investment

Subject Areas : Applied Economics

Jamshid Pajoyan ¹ , تانیا Khosravi ²

1 - ندارد
2 - ندارد

Received: 2012-11-12 Accepted : 2013-01-15 Published : 2012-12-21

Keywords: tax rate, Effective Tax Rate, tax base, corporate tax, private investment.&#x0D, &#x0D, JEL Clas, B23,

Abstract :

Investment is one of the effective factors on economic growth and development. So, paying attention to growth and development of private investment is very important. Corporate tax, in addition to being a sourse of income for the government, has an impact on private investment. In this study the effect of corporate tax on private investment has been investigated. The data were collected through library and they were based on time series data taken from central bank and the Organization of the Tax Affairs.Through a neoclassical investment model, the effect of explanatory variables on governmental section, corporate tax, inflation, interest rate and two dummy variables, using the econometrics method GMM and software Eviews for the economy of Iran were estimated. The investment in governmental section, corporate tax, inflation and interest rate had a negative relationship with private investment, but facilities, adjustment policies and Currency Reserve Fund had positive effects on private investment. Regarding the reversed relationship between investment and corporate tax,applying different tax exemptions in corporate tax discussion, setting the rate of depreciation more than the real economics depreciation rate, speeding up the acceptable depreciation using the rate of decreasing tax on companies, after several progressive rates and on the whole reassessment of that descreased interest rate can be effective in encouraging investment