Empirical evidence on the impact of recent Korean tax reforms
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DOIhttp://dx.doi.org/10.21511/imfi.15(4).2018.03
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Article InfoVolume 15 2018, Issue #4, pp. 35-47
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In 2011, Korea required all firms to report all value added tax (VAT) invoices electronically to tax authorities. This unique law provided a natural experiment to examine the effects of this disclosure on income taxes and firms’ related responses. The authors find that this additional required disclosure caused firms to become less aggressive on their income taxes, and that they were unable to pass increased tax burdens forward to consumers or backward to suppliers and labor. To maintain, profitability firms cut research and development (R&D) costs, and this cost cutting was larger for tax aggressive firms. Policy implications of this unintended result are discussed.
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JEL Classification (Paper profile tab)M41, H26
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References44
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Tables6
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Figures0
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- Table 1. Industry distribution of the sample
- Table 2. Descriptive statistics
- Table 3. Correlations
- Table 4. Change in taxes after law change
- Table 5. Regression results for tax shifting
- Table 6. Regression results for R&D investment
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