Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach
The policy of gradual reduction in the corporate tax rate in Malaysia, which commenced since 1988 and continued till today, has become a cause for concern, as the benefits of such reduction have not been established at least empirically. The present study thus investigates the impact of the reductio...
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2017
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| Online Access: | http://irep.iium.edu.my/62175/ http://irep.iium.edu.my/62175/1/FGIC2017.pdf |
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iium-62175 |
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iium-621752018-02-28T07:59:18Z http://irep.iium.edu.my/62175/ Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach Annuar, Hairul Azlan Isa, Khadijah Salihu, Ibrahim Aramide Solarin, Sakiru Adebola Hamdan, Hamdino HJ Public Finance The policy of gradual reduction in the corporate tax rate in Malaysia, which commenced since 1988 and continued till today, has become a cause for concern, as the benefits of such reduction have not been established at least empirically. The present study thus investigates the impact of the reduction of the corporate tax rate on the corporate tax revenue. The study adopts the theory of taxation by Ibn Khaldun – depicted as laffer curve. The analysis of the time series data for period between 1996 and 2014, using the ARDL approach, shows that the corporate tax rate has a dual effect on the corporate tax revenue over the study period. It shows an inverted U-shape relationship between corporate tax rate and corporate tax revenue and further reveals that the optimal tax rate is 25.5156%. Inferentially, a positive relationship existed between the two variables prior to the optimal tax rate and a negative relationship afterward. A further test of causality also shows a long-run unidirectional causality from corporate tax rate to corporate tax revenue. Thus, the policy of the gradual reduction of the corporate tax rate is suspected to have positive impacts on the productivity of Malaysia companies in term of increase in corporate tax revenue. 2017 Conference or Workshop Item NonPeerReviewed application/pdf en http://irep.iium.edu.my/62175/1/FGIC2017.pdf Annuar, Hairul Azlan and Isa, Khadijah and Salihu, Ibrahim Aramide and Solarin, Sakiru Adebola and Hamdan, Hamdino (2017) Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach. In: FGIC 2107 1st Conference on Governance and Integrity, 3rd-4th April 2017, Kuantan, Pahang. (Unpublished) |
| repository_type |
Digital Repository |
| institution_category |
Local University |
| institution |
International Islamic University Malaysia |
| building |
IIUM Repository |
| collection |
Online Access |
| language |
English |
| topic |
HJ Public Finance |
| spellingShingle |
HJ Public Finance Annuar, Hairul Azlan Isa, Khadijah Salihu, Ibrahim Aramide Solarin, Sakiru Adebola Hamdan, Hamdino Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| description |
The policy of gradual reduction in the corporate tax rate in Malaysia, which commenced since 1988 and continued till today, has become a cause for concern, as the benefits of such reduction have not been established at least empirically. The present study thus investigates the impact of the reduction of the corporate tax rate on the corporate tax revenue. The study adopts the theory of taxation by Ibn Khaldun – depicted as laffer curve. The analysis of the time series data for period between 1996 and 2014, using the ARDL approach, shows that the corporate tax rate has a dual effect on the corporate tax revenue over the study period. It shows an inverted U-shape relationship between corporate tax rate and corporate tax revenue and further reveals that the optimal tax rate is 25.5156%. Inferentially, a positive relationship existed between the two variables prior to the optimal tax rate and a negative relationship afterward. A further test of causality also shows a long-run unidirectional causality from corporate tax rate to corporate tax revenue. Thus, the policy of the gradual reduction of the corporate tax rate is suspected to have positive impacts on the productivity of Malaysia companies in term of increase in corporate tax revenue. |
| format |
Conference or Workshop Item |
| author |
Annuar, Hairul Azlan Isa, Khadijah Salihu, Ibrahim Aramide Solarin, Sakiru Adebola Hamdan, Hamdino |
| author_facet |
Annuar, Hairul Azlan Isa, Khadijah Salihu, Ibrahim Aramide Solarin, Sakiru Adebola Hamdan, Hamdino |
| author_sort |
Annuar, Hairul Azlan |
| title |
Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| title_short |
Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| title_full |
Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| title_fullStr |
Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| title_full_unstemmed |
Corporate tax (CT)rate and CT revenue in Malaysia – Laffer curve: An autoregressive distributed lag (ARDL) approach |
| title_sort |
corporate tax (ct)rate and ct revenue in malaysia – laffer curve: an autoregressive distributed lag (ardl) approach |
| publishDate |
2017 |
| url |
http://irep.iium.edu.my/62175/ http://irep.iium.edu.my/62175/1/FGIC2017.pdf |
| first_indexed |
2023-09-18T21:28:09Z |
| last_indexed |
2023-09-18T21:28:09Z |
| _version_ |
1777412330892558336 |