Determination of an Optimal Corporate Competition Tax Rate: An International Evidence

The international agreement on a corporate minimum tax, has set a rate of 15% as the floor rate of corporate tax rate in order to regulate competition between states in the context of attracting firms. But this rate does not seem to be relevant, since it is much discussed in the literature as to its applicability. The question that arises is, what is the optimal corporate tax rate that could be set in the context of this tax competition between states? It is a question of identifying the optimal corporate tax rate that maximizes the corporate tax rate elasticity of tax buoyancy. The objective of this paper is to determine the corporate tax rate that could meet the approval of firms. This paper based on a theoretical and econometrical model but not on an ad-hoc econometric model as is in previous studies. We use a random coefficients model. The main results establish that the optimal corporate tax rate differs from one country to another due to the structure of the country's economy. Nevertheless, it exists an optimal corporate competition tax rate which is 29.32% for OECD countries and 28.27% for non-OECD countries. JEL Codes : H21, H26, C61, C51.