engleski

The Correlation Between Profitability and Tax Breaks in the Area of Special National Status

In the period of 1996–2002, Croatian state authorities have already administratively designated certain areas of the country, declaring them as areas of special national status. Components of the above areas examined by this paper are Group I, II and III areas of special state care, the City of Vukovar and the highland area. Use of tax breaks in these areas, through a system of income taxation of entrepreneurs, represent various forms of incentives and breaks allowing taxpayers to reduce the basis for tax calculation and/or the amount of tax liability. This paper observed the correlation between the given variables ; net profit margin representing entrepreneurs’ profitability, tax breaks reducing the basis for the income tax (net reduction of tax liability and tax credit carried forward), tax breaks reducing tax liability, actual tax burden, population density, costs of gross salary, enterprise growth and productivity of work. The paper also observed correlation between profitability and efficiency of the tax breaks to individual components in the total tax breaks in areas of special state concern. The research includes the period of 2005–2013. The observation also takes into account the effect of a period of recession through a binary, the so-called dummy variable for the period of 2009–2013. Spearman’s and point biserial correlation coefficients were used to test correlation of given variables. The observed correlation of the tax breaks and profitability considering the components of areas of special state concern is clear in the Group I and Group III areas of special state concern and in the City of Vukovar. Considering the observed correlation of profitability and efficiency of the tax breaks to individual components in the total tax breaks in the special national status area, it is clear that there is significant unpredictability of correlation between the observed variables.

tax breaks ; profitability ; areas of special national status ; correlation

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