THE IMPACT OF THE TAX SYSTEM ON SERBIA’S COMPETITIVENESS

Ivana Domazet, Darko Marjanović, Isidora Beraha

DOI Number
https://doi.org/10.22190/TEME240122010D
First page
167
Last page
183

Abstract


Foreign direct investment (FDI) is an effective strategy for exploiting a country’s competitive advantages. This paper aims to assess the importance of certain factors of the tax system for the activity of foreign investors in Serbia. In particular, it aims to determine how the national tax structure affects Serbia’s ability to improve its competitiveness in attracting FDI. The research was conducted in the second quarter of 2023 and included an online survey of 88 foreign companies that had invested in Serbia between 2001 and 2019. The study used the one-way analysis of variance (ANOVA) and the independent samples t-test. Four factors were analysed, namely the tax rate and the corporate tax base, as well as the tax rate and the personal income tax base. The results show that the corporate tax rate is the most important factor influencing the decision of foreign investors to invest in Serbia.


Keywords

tax system, competitiveness, foreign direct investment, corporate income tax, personal income tax

Full Text:

PDF

References


Bella, M. I., & Yudianto, I. (2021). The Impact of Tax Incentives on Foreign Direct Investment: The Case of Tax Holiday and Corporate Income Tax Rates in Indonesia. Journal of Accounting Auditing and Business, 4(2), 34-48. doi.org/10.24198/jaab.v4i2.34397

Bruno, R. L., Campos, N. F., & Estrin, S. (2021). The effect on foreign direct investment of membership in the European Union. Journal of Common Market Studies, 59(4), 802-821. doi.org/10.1111/jcms.13131

Contractor, F. J., Dangol, R., Nuruzzaman, N., & Raghunath, S. (2020). How do country regulations and business environment impact foreign direct investment (FDI) inflows? International Business Review, 29(2), 101640. doi:10.1016/j.ibusrev.2019.101640

Da Fonseca, P. V., & Jucá, M. N. (2020). The influence of taxes on foreign direct investment: systematic literature review and bibliometric analysis. European Research Studies, 23(2), 55-77. doi:10.35808/ersj/1580

Desbordes, R., & Wei, S. J. (2017). The effects of financial development on foreign direct investment. Journal of Development Economics, 127, 153-168. doi:10.1016/j.jdeveco.2017.02.008

Dewi, I. R., Mochtar, M., & Sihombing, P. R. (2023). The Taxing Dynamic: Corporate Income Tax Rates and Macroeconomics Indicators’ Impact on Foreign Direct Investment in ASEAN. Jurnal Akuntansi dan Perpajakan, 9(2), 253-279. doi:10.26905/ap.v9i2.10617

Domazet, I., Marjanović, D., Ahmetagić, D., Bugarčić, M., & Simović, V. (2024) Business Sector Investment in R&D as a Factor for Improving Innovation - Evidence from Hungary, Romania, Bulgaria, and Serbia. Eastern European Economics, 62(1), 50–68. doi:10.1080/00128775.2023.2281453

Domazet, I., Marjanović, D., Ahmetagić, D., & Stantić, J. (2023). Innovation and ICT: Key Factors of Successful Business. In Correia, A. & Agua, P.B. (Eds.) Innovation, strategy, and transformation frameworks for the modern enterprise, 327-345. Hershey: IGI Global. doi:10.4018/979-8-3693-0458-7.ch014

Domazet, I., Marjanović, D., Beraha, I., & Ahmetagić, D. (2022). Innovative capacity as a driving force of national competitiveness. Ekonomika preduzeća, 70(7-8), 406-418. doi:10.5937/EKOPRE2208406D

Djaković, M., Pjanić, M., & Inđić, M. (2023). Inspecting the influence of macroeconomic factors on stock returns: The case of Serbia. Ekonomika preduzeća, 71(5-6), 343-354. doi:10.5937/EKOPRE2306343D

Egger, P., & Raff, H. (2015). Tax rate and tax base competition for foreign direct investment. International tax and public finance, 22, 777-810. doi:10.1007/s10797-014-9305-4

Gamze, Ö. Y. (2020). The effect of corporate tax on foreign direct investment. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 55, 221-244.

Haudi, H., Wijoyo, H., & Cahyono, Y. (2020). Analysis of most influential factors to attract foreign direct investment. Journal of Critical Reviews, 7(13). doi:10.31838/jcr.07.13.627

Jovanović, M., Domazet, I., & Marjanović, D. (2023). Quality of Government as an Attracting Factor of FDI - Evidence from Chosen Southeastern European Countries. Economic Analysis, 56(2), 1-18. doi:10.28934/ea.23.56.2.pp1-18

Majeed, A., Jiang, P., Mahmood, A., Khan, M. A., & Olah, J. (2021). The impact of foreign direct investment on financial development: new evidence from panel cointegration and causality analysis. Journal of Competitiveness, 13(1), 95-112. doi:10.7441/joc.2021.01.06

Marjanović, D., Domazet, I., & Vukmirović, I. (2022). Social Environment as a Factor of Capital Investment in Serbia. Eastern European Economics, 60(3), 247-264. doi:10.1080/00128775.2022.2048181

Marjanović, D., Beraha, I., & Domazet, I. (2022). Belt and Road Initiative as a Development Chance for the Western Balkan Countries: The Case of Serbia. In Bhuiyan, M.A. & Beraha, I. (Eds) Opportunities and challenges for multinational enterprises and foreign direct investment in the Belt and Road initiative, 172-193. Hershey: IGI Global. doi:10.4018/978-1-7998-8021-9.ch008

Marjanović, D., & Domazet, I. (2021). Foreign Direct Investments: A Key Factor for Business Globalization. In Bayar, Y. (Eds), Institutional, Economic, and Social Impacts of Globalization and Liberalization, 96-116. Hershey: IGI Global. doi:10.4018/978-1-7998-4459-4.ch006

Marjanović, D., & Domazet, I. (2021a). Tax competitiveness as a significant factor in attracting foreign investment – the case of Serbia. Argumenta oeconomica, 2(47), 63-80. doi:10.5937/spm79-42699

Marjanović, D., Domazet, I., & Simović, V. (2020). Influence of tax incentives on the business of foreign investors in Serbia. TEME, XLIV (3), 969-984. doi:10.22190/TEME190331064M

Osei, M. J., & Kim, J. (2023). Financial development and the growth effect of foreign direct investment: Does one size fit all? International Economics, 173, 276-283. doi:10.1016/j.inteco.2023.01.001

Pandya, S. S. (2016). Political economy of foreign direct investment: Globalized production in the twenty-first century. Annual Review of Political Science, 19, 455-475. doi:10.1146/annurev-polisci-051214-101237

Pankova, V. A., & Pekhalskiy, D. I. (2023). Technological proximity of countries as a factor of inward foreign direct investment to developing economies. Voprosy Ekonomiki, 12. doi:10.32609/0042-8736-2023-12-66-85

Pesiri, S. (2023). The Complex Relationship between Corporate Income Tax and Foreign Direct Investment before and after Pillar Two. doi:10.2139/ssrn.4436105

Stevanović, T., Marković, I., & Lepojević, V. (2022). Importance of Institutional Capacity for Attracting FDI in the Western Balkan Countries. TEME, XLVI (1), 145-158. doi:10.22190/TEME200815008S

Sujarwati, A. I., & Qibthiyyah, R. M. (2020). Corporate income tax rate and foreign direct investment: A Cross-country empirical study. Economics and Finance in Indonesia, 66(1), 25-46. doi:10.47291/efi.v66i1.679

Xiong, T., & Sun, H. (2021). Structure and dynamics of global capital and international trade: Analysis of the relationship between exports and foreign direct investment (FDI) from 2001 to 2006. International Journal of Finance & Economics, 26(1), 542-559. doi:10.1002/ijfe.1803




DOI: https://doi.org/10.22190/TEME240122010D

Refbacks

  • There are currently no refbacks.


© University of Niš, Serbia
Creative Commons licence CC BY-NC-ND
Print ISSN: 0353-7919
Online ISSN: 1820-7804