African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4157

Full Length Research Paper

The determinants of the corporate effective tax rate of Italian private companies

Simone Poli
  • Simone Poli
  • Dipartimento di Management, Università Politecnica delle Marche, Ancona, Italy.
  • Google Scholar

  •  Received: 12 July 2019
  •  Accepted: 19 September 2019
  •  Published: 31 October 2019


This study investigates the determinants of the corporate effective tax rate (ETR) of Italian private (unlisted) companies in 2016 and 2017. Although a large body of research has addressed the issue of the determinants of the ETR, both the Italian context and the private companies have been the object of scant attention in previous studies. To test research hypotheses, as in several previous studies, a pooled cross-sectional OLS model has been adopted. The study shows a statistically significant and negative (positive) association between ETR and firm size, investment in tangible fixed assets, inventories, investments in subsidiaries, affiliates and other companies, and the firm’s profitability (intangible fixed assets and the firm’s indebtedness). Conversely, it shows no statistically significant association between ETR and tangible fixed assets. The financial year in question, the region where companies are located, and the economic sector they belong to, included as control variables, affect the ETR. Italian public policy-makers and Italian and non-Italian economic operators can benefit from the results of the study in order to make more informed future decisions.

Key words: Effective tax rate, private companies, Italy.