EFFECTIVE TAX RATE I PORTUGAL:
DETERMI A TS A D FI A CIAL REPORTI G
IMPACT

Ana Gabriela Costa, Faculty of Economics, University of Porto, anagabriela_mvc@hotmail.com Francisco Vitorino Martins, Faculty of Economics, University of Porto, vmartins@fep.up.pt Elísio Brandão, Faculty of Economics, University of Porto, ebrandao@fep.up.pt ovember, 2012

Abstract:
In academic literature, it is usual to analyze the variability of effective tax rates, because some authors try to justify the reasons for the existence of differences between these taxes and statutory ones. However, this kind of research has never been done for the Portuguese case. The objective of this study is to examine the relationship between the effective tax rate and some specific characteristics of Portuguese companies. On the other hand, in the analyzed period we can verify the change of accounting standards which happened in Portugal in 2010, that is why it is also important to evaluate the impact of these modifications on the studied relations.
Therefore, the results show that some characteristics, such as leverage, capital intensity, inventory intensity and profitability are statistically significant in the estimation of effective tax rates supported by companies. On the other hand, it has been checked that, according to the mean and median equality tests done to the dependent variables, we reject the hypothesis of these measures being equals when we compare

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Electronic copy available at: http://ssrn.com/abstract=2180032

2010 with the other years. In the case of the test of permanent structures on the level of regressions, it has been verify that it is not identical either.
In conclusion, we can say that the introduction of international accounting standards might have produced accounting impacts, as fiscal ones.

Keywords: effective tax rate, financial report, accounting harmonization.

JEL Codes: H20, M41, M48.

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Introduction

In the last decades, we have witnessed the dismantlement of world trade barriers, a fact that has resulted in the increase of business and financial operations, the creation of new financial instruments and the development of capital markets, among others.
Therefore, to enhance the growth of these phenomena it was necessary to develop and harmonize the financial information provided by companies, taking into account their basic qualities of understandability, relevance, reliability and comparability.
In the process of harmonization at European level, we point out the publication of
Council Regulation (EC) No. 1606/2002, which has forced the EU listed companies to adopt international accounting standards after the year 2005 and gave to states members the ability to allow or require the use of these standards in other cases. In Portugal, this standard has immediate applicability because it is a Community regulation. However, with respect to the entities excluded from the requirement described above, our country has just shown some progress in the promulgation of Decree-Law n. º 158/2009 of 13
July, more precisely ‘Sistema de

ormalização Contabilística’, also designated by the

acronym S C.
In this context, research has been developed on various topics, especially on the variations in the financial information presented by companies, namely in the Balance
Sheet, Income Statement and Financial Ratios, and on the evaluation of harmonization/degree of compliance and quality of accounting data available to stakeholders (Cordeiro, 2008, for example).

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Electronic copy available at: http://ssrn.com/abstract=2180032

However, over a process of harmonizing various difficulties arise, including cultural, political, legal or tax system dependency. For example, in many countries, it is noted that accounting and taxation are closely linked and, therefore, any change in accounting produces effects at a tax level.
In Portugal the model of partial dependency view of taxation prevails face to accounting, as seen by the provisions of