Activity: Talk or presentation › Science to science
Description
I study the timeliness of Corporate Income Taxes (CIT) Payment upon the recognition of income and the effects of CIT payment features on the timeliness. Theory suggests that the closer tax collection time to the income arises, the higher the probability tax is paid. I use the sensitivity of CIT payment to the income change in profitable periods to proxy the timeliness of CIT payment in 43 countries. The results capture a phenomenon that firms tend to pay a higher cash effective rate of CIT in income-decreasing firm-years, vice versa. This finding indicates a CIT payment timing problem in responding to the income change. Furthermore, I also find that the qualities of CIT payment features, such as shorter tax periodicity, more recent advance payment base, and more frequent advance payment, improve the timeliness.