RELATIONSHIP BETWEEN CORPORATE TAX AND PRIVATE INVESTMENT IN PAKISTAN: AN EMPIRICAL ANALYSIS

Zaheer Ahmed Babar, Masood Sarwar Awan, Muhammad Nadeem

Abstract


Investment plays a pivotal role in promoting growth and
bringing prosperity countries. However higher Corporate Tax rates are considered to be one of the main hurdles in the way of Investment.

Keeping in view this fact, the present study has been an effort to
empirically explore this contrivance for Pakistan. The Study used
time series data for the time period 1984-2014 by applying Auto
Regressive Distributed Lag (ARDL) technique for econometrics
analysis. Results show that higher corporate tax rate has mitigated private investment in Pakistan. High tax rate for corporate sector increases the cost and reduces the corporate profits; hence it decreases private investment. The present study recommends that corporate tax rate should be decreased to enhance private investment in Pakistan.


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