Do high corporate income tax rates demotivate entrepreneurs? The case of Azerbaijan

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F70883521%3A28120%2F15%3A43874920" target="_blank" >RIV/70883521:28120/15:43874920 - isvavai.cz</a>

Result on the web

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DOI - Digital Object Identifier

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Result language

angličtina

Original language name

Do high corporate income tax rates demotivate entrepreneurs? The case of Azerbaijan

Original language description

There exists a large body of theoretical and empirical work on the effects of corporate income taxes on entrepreneurial activity, but the literature remains inconclusive for our topic. Therefore, the purpose of this paper is to investigate whether corporate income tax rates affect the motivation of entrepreneurs to begin an entrepreneurial activity or not. Because of that we examine how corporate income taxes affect entrepreneurs in Azerbaijan using data in the period between the first quarter of 2004 and the fourth quarter of 2013. The model by Ruud and Gaëtan (2007) theoretically motivates and guides our analysis for studying how high tax rates affect the entrepreneurship decision. The model specifies how corporate income taxation affects the entry decision, based on the observation that entrepreneurs can choose whether to expand their business or not. Here, simple correlation analysis, impulse-response function analysis, and Johansen cointegration test has been used for the long and short term relationship. The empirical results provide evidence that higher corporate income tax rates exert a slightly positive influence on entrepreneurs in the shortrun. However, in the long-run these results are insignificant. We find that the main factors behind this are the application of a simplified and standard tax system of the Tax Code of Azerbaijan Republic that the former increases the growth rate of entrepreneurs running under a 'small business' while the latter decreases the growth rate of entrepreneurs running under 'small entrepreneuship subject'. This paper sheds light on the relationship between corporate income tax rates and the number of entrepreneurs, and provides the place for future researches in Azerbaijan.

Czech name

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Czech description

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Type

D - Article in proceedings

CEP classification

AE - Management, administration and clerical work

OECD FORD branch

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Project

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Continuities

V - Vyzkumna aktivita podporovana z jinych verejnych zdroju

Publication year

2015

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection

Conference Proceedings of MEKON 2015 Selected Papers

ISBN

978-80-248-3840-3

ISSN

1805-9945

e-ISSN

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Number of pages

13

Pages from-to

107-119

Publisher name

VŠB-TU Ostrava

Place of publication

Ostrava

Event location

Ostrava

Event date

Feb 4, 2015

Type of event by nationality

EUR - Evropská akce

UT code for WoS article

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