—This study attempts to examine corporate effective
tax rates (ETRs) of Malaysian public companies listed on Bursa
Malaysia during official assessment system and self assessment
system tax regimes. The objective is to examine the level of
corporate ETRs during official assessment system and self
assessment system tax regime and. To achieve the objective, this
study uses pooled sample data of 316 companies for the years
1993 to 2006. In determining the two tax regime, the
investigation period is classified into two, where the period from
1993 to 2000 represents the official assessment system tax
regime whereas the period from 2001 to 2006 represents the self
assessment system tax regime. This study finds that corporate
ETRs are below the statutory tax rate (STR) in both tax regimes.
Moreover, this study reveals that ETRs during the self
assessment system tax regime is lower than the official
assessment system tax regime. Additionally, this study also
examines the determinants of corporate ETRs during both tax
regimes. The result supports political cost theory which
suggests that larger companies endure higher ETRs. Besides
that, lower ETRs are significantly related to highly leverage
companies, greater investment in fixed assets and lower
investment in inventory. This study also finds that companies
with higher return on assets face lower ETRs. Further, sector
analysis are carried out to provide the evidence for the
variability of ETRs across sectors. The results indicate that
companies from trading and services, properties and
construction sectors face higher ETRs. Overall, this study
explains the impacts of tax incentives to corporate ETRs and
determinants of corporate ETRs.
—Tax Planning, Corporate Effective Tax Rates,
Statutory Tax Rate and Malaysian Listed Companies.
Cite:Rohaya Md Noor , Nur Syazwani M. Fadzillah, and Nor’Azam Mastuki, "Corporate Tax Planning: A Study On Corporate Effective Tax Rates of Malaysian Listed Companies," International Journal of Trade, Economics and Finance vol.1, no.2, pp. 189-193, 2010.