Determinants of the tax burden of the Spanish companies for the corporate income tax during the economic crisis (2008-2015)

The main objective of this paper is to analyse the determinants of Spanish company tax burden in recent times and, in particular, to ascertain whether at a time of deep economic crisis, such as the Great Recession, larger and more profitable companies exert their political power in order to reduce their fiscal costs or whether, by contrast, they bear part of the political costs in the form of more taxes. For the analysis, we use the effective tax rate (ETR) of Corporation Tax (CT), taking as ETR determinant variables those established by each of the two hypotheses indicated: size and economic profitability. In addition, we include indebtedness and capital intensity as control variables. We use econometric regression, following the Arellano-Bover Generalized Method of Moments (GMM System) for a sample of 3,362 companies, randomly extracted from the SABI base, drawing on data for the 2008-15 period, with total values and segregating by production sectors. We find that the political cost hypothesis tends to be fulfilled, both at a general level of the economy and in most sectors. Among other causes, we associate this to government pressure to control public deficit during the crisis. Using statistical analysis, we also examine whether the tax burden for CT differs depending on the sector or fiscal residence in question. In this case, results show that sectors with higher levels of capitalization evidence a lower ETR and that those which are more labour intensive display a higher ETR. As for the region of residence, the only statistically significant result is the existence of a greater ETR in Madrid than in the rest of the regions, due to the fiscal domicile of the largest and most important companies being seated in the capital.