Do High Corporate Income Tax Rates Demotivate Entrepreneurs? The Case of Azerbaijan

Nadirov, O., & Aliyev, K. (2015). Do high corporate income tax rates demotivate entrepreneurs? The case of Azerbaijan. MEKON Selected Papers. Ostrava: VSB-TU Ostrava, 107-119.

13 Pages Posted: 31 Jul 2020

See all articles by Orkhan Nadirov

Orkhan Nadirov

affiliation not provided to SSRN

Khatai Aliyev

Azerbaijan State University of Economics (UNEC); Baku Engineering University

Date Written: 2015

Abstract

The purpose of this paper is to investigate whether corporate income tax rates affect the motivation of entrepreneurs to begin an entrepreneurial activity or not. Because of that we examine how corporate income taxes affect entrepreneurs in Azerbaijan using data in the period between the first quarter of 2004 and the fourth quarter of 2013. Here, simple correlation analysis, impulse-response function analysis, and Johansen co-integration test has been used for the long and short term relationship. The empirical results provide evidence that higher corporate income tax rates exert a slightly positive influence on entrepreneurs in the short-run. However, in the long-run these results are insignificant. We find that the main factors behind this are the application of a simplified tax system of the Tax Code of Azerbaijan Republic that caused a rise in the rate of small entrepreneurship subjects. This paper sheds light on the relationship between corporate income tax rates and the number of entrepreneurs, and provides the place for future researches.

Keywords: Corporate Income Tax; Entrepreneurs; Motivation; Time-Series Analysis; Impulse-Response Analysis

JEL Classification: H21; H32; K34

Suggested Citation

Nadirov, Orkhan and Aliyev, Khatai, Do High Corporate Income Tax Rates Demotivate Entrepreneurs? The Case of Azerbaijan (2015). Nadirov, O., & Aliyev, K. (2015). Do high corporate income tax rates demotivate entrepreneurs? The case of Azerbaijan. MEKON Selected Papers. Ostrava: VSB-TU Ostrava, 107-119., Available at SSRN: https://ssrn.com/abstract=3643545

Orkhan Nadirov

affiliation not provided to SSRN

Khatai Aliyev (Contact Author)

Azerbaijan State University of Economics (UNEC) ( email )

Istiglaliyyat street 6
Baku, AZ Az1001
Azerbaijan

Baku Engineering University ( email )

Hasan Aliyev str. 120
Khirdalan, Baku AZ 0101
Azerbaijan

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