Like many other countries, the Dominican Republic (DR) has introduced various tax expenditures designed to advance strategic development objectives. Although the literature on value-added tax incentives is extensive, the impact of Corporate Tax Incentives is less explored and is the subject of an ongoing debate. This paper contributes to this debate evaluating the effect of Corporate Income Tax (CIT) on firms' performance in Dominican Republic. Using firm-level data from 2006 to 2015, an analysis based on a propensity score matching is carried out in order to investigate the aforementioned relationship considering some opportunely selected financial indicators as a proxies of firm's performance. The results show that the exemption from the CIT positively impacts the firms' performance and provide further evidence that reducing the tax liabilities would alleviate market distortions and promote competitiveness based on fundamentals.
Fiscal Policies and Firms' Performance: A Propensity Score Matching Analysis in Dominican Republic
Alessandra AMENDOLA;Marinella BOCCIA
;Luca SENSINI
2019-01-01
Abstract
Like many other countries, the Dominican Republic (DR) has introduced various tax expenditures designed to advance strategic development objectives. Although the literature on value-added tax incentives is extensive, the impact of Corporate Tax Incentives is less explored and is the subject of an ongoing debate. This paper contributes to this debate evaluating the effect of Corporate Income Tax (CIT) on firms' performance in Dominican Republic. Using firm-level data from 2006 to 2015, an analysis based on a propensity score matching is carried out in order to investigate the aforementioned relationship considering some opportunely selected financial indicators as a proxies of firm's performance. The results show that the exemption from the CIT positively impacts the firms' performance and provide further evidence that reducing the tax liabilities would alleviate market distortions and promote competitiveness based on fundamentals.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.