engleski

EFFECTIVE CORPORATE INCOME TAX RATE AND KEY FINANCIAL RATIOS

The main goal of this paper is to clarify the relationship between effective corpo-rate income tax rate and key financial ratios for companies listed on the Zagreb Stock Exchange in the period from 2014 to 2017. The difference between the nominal corporate tax rate and effective corporate income tax rate arises from the difference between the tax base and accounting profit. Income tax is a result of the application of a nominal tax rate to the tax base that is formed by using various corrections on accounting profit. In this paper relation between effective corporate income tax rate, an indicator of the size of the company and three financial ratios ; profitability, leverage and capital intensity were observed. Re-sults indicate that profitability is positively and significantly related to effective corporate income tax indicating that an increase in profits results in larger tax obligations. Size is another important factor that is also positively related to the effective corporate income tax but the results in this paper did not lead to strong conclusions regarding this relationship.

corporate income tax, effective tax rate, size, financial ratios, Zagreb stock exchange

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