Corporate Tax Policies and their Influence on International Business Performance

Abstract

Corporate tax policy plays a major role in influencing investment decisions, growth of the business, competitiveness in an international environment, and overall performance of the business. In this study, the influence of corporate tax burden, tax incentives, stability of policies and regulations on international business performance has been examined using a comparative analysis approach. Advanced, emerging and developing economies have been analyzed in the study using Corporate Tax Burden Index (CTBI), Investment Attractiveness Index (IAI), and Business Performance Index (BPI). As per the results obtained from the study, advanced economies scored highest in terms of investment attractiveness index (84) and business performance (85). Emerging economies were next with scores of 76 and 78, respectively, followed by developing economies with scores of 65 and 67. Moreover, it can be seen that application of tax incentives will facilitate expansion of business through reduction in costs of investment It is, however, worth acknowledging that having low corporate taxes alone is not enough for improving the international performance of business because other determinants such as policy stability, infrastructure, institutional quality, effectiveness of regulations, and market environment are crucial. Overall, having a good corporate tax policy will help attract international investment and improve competitiveness.