| Summary: | 碩士 === 國立交通大學 === 管理學院碩士在職專班財務金融組 === 98 === The purpose of this paper is to examine the influence of tax incentives on enterprise values. In theory, taxation policies should be neutral in order to avoid the interventions of market mechanisms or the dislocations of asset allocations. However, Taiwan has a highly complex taxation system. For example, Profit-Seeking Enterprise Income Tax Law is the guidelines for the tax payments of all companies. However, there are also tax incentives for particular industries and such incentives often twist the original values of companies. This is because some companies increase their enterprise values with tax benefits without undertaking the obligations of tax payments. The companies outside the scheme of tax incentives still have to shoulder heavy taxation burdens. Unfair taxation systems result in the differences in the values of different industries. This paper applies method of least-squares regression analysis and samples the companies listed on Taiwan Stock Exchange in 1991~2008 (covering a total of 18 years). The number of samples is 7,787. The test results show that since 1992, there is a significant and positive correlation between price/book values and the tax benefits each share. Statistically, the electronic shares on average enjoy higher tax exemption benefits and also highly enterprise value. This indicates that the tax burdens of the electronics industry are lower than the average of all industries. This is detrimental to the vertical fairness of taxations. However, the abuse of tax-exempt investments by too many companies has led to an oversupply of electronic products and difficulties in making profits. As a result, the enterprise values of the companies in the electronics industry have been on gradual declines over the years. The research finding can serve as a reference for companies in the decision over whether they should invest in the sectors that enjoy tax exemptions. It is also suggested that the government should take into account all the sunset clauses in association with all kinds of tax incentives. In case of externality, subsidies are recommended in place of tax expenditures. In this way, all industries can develop in a balanced manner and national resources can be effectively allocated.
Keywords: tax incentives, enterprise value, neutrality of taxation policies, externality, tax expenditures
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