Fiscal Reform and the Tax Burden of State-Owned Enterprise in China

This study examines the link between state-owned enterprises (SOEs) and effective tax rates (ETRs) in China. Based on a sample of China’s listed companies from 1999-2010, this paper uses the institutional environments, socialist planned commodity economy and socialist market economy, to examine the relationship between ETR and SOE. Our results suggest that SOEs are an important determinant of ETR in China. China’s SOEs pay higher effective tax rates and the results are consistent with the SOE hypothesis developed in this paper based on examination of the China’s context.