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Tax credit, exports and regional disparity : Microevidence from Hungary
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https://hdl.handle.net/20.500.14018/27447
Abstract
Hungary applied a generous corporate tax credit scheme for the 1998-2000 period. Over 40% of all manufacturing firms received subsidy by applying a deduction from its payable corporate tax. As the tax credit was related to investment, firms could use these funds to expand into foreign markets. Using a new firm level data from Hungary, with direct information on tax credit use, we investigate how this tax credit affected entry into exporting. We find that a firm is about 4% more likely to start exporting if it had received a tax credit. In terms of the policy’s regional impact, we find that the impact of tax credit regarding export market entry is not strongly dependent on regional disparity.
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Working paper
Date
2012