Determinants of the Effective Tax Rate

The effective tax rate has become a relevant indicator following the implementation of Council Directive (EU) 2022/2523 issued on 14 December 2022, which aims to ensure a global minimum level of taxation for multinational enterprise groups and large domestic groups in the European Union. The effective rate can be influenced by several key economic factors when companies compile their tax strategy. Our results show that inventory intensity, R&D expenditure, economic return, financial return, and reinvestment rate have a negative impact on the effective tax rate. In contrast, financial leverage and company size exhibited a positive impact.