Effect of changes in tax policy on corporate investment decision

Abstract

This study seeks to comprehensively examine the connection between effective tax rates, income tax expenses, and deferred tax rates in relation to investment decisions, with a specific focus on how these fiscal elements affect organizational capital allocation choices. It concentrates solely on the effect of tax policy changes on corporate investment behavior, acknowledging that tax-related factors can heavily influence strategic planning. Primary data was gathered from individuals directly engaged in financial and investment decision-making within organizations. SPSS software was used to process the data, employing various statistical techniques such as regression and correlation analysis to evaluate both the strength and nature of the relationships. In this analysis, corporate tax rates, financing policies, and tax education acted as the independent variables, while investment decision was treated as the dependent variable. The correlation analysis demonstrated a strong positive relationship between corporate tax rates and financing policies with investment decisions, implying that favorable tax systems and effective financing strategies foster higher investment levels. Although the link between tax education and investment decisions was weaker, it remained positive, indicating some degree of influence. Overall, corporate tax rates, tax expenses, deferred tax rates, and tax knowledge were recognized as critical determinants of investment choices. Moreover, regression results confirmed that tax rates, tax expenses, and deferred tax significantly and positively affect investment decisions. These results underscore that favorable tax environments and well-managed fiscal policies can enhance investment activity, thereby supporting more efficient and strategic investment decision-making.

Keywords: Investment Decision, Tax Rates, Tax Expenses and Deferred and Tax.