TAXATION REGULATION OF THE BRICS' INNOVATIVE COMPANIES

The question as to whether tax rate influences capital structure remains unresolved, though the amount of research conducted on the issue grows every year. This question is particularly important for innovative companies for two reasons. First, R&D spending and the level of innovativeness among firms are crucial indicators of a country's overall economic performance. The second reason is that tax incentive programs today are applied by governments with increasing frequency. There is a strong lack of tax rate influence on the capital structure of innovative companies and tax incentive programs impact on the debt-to-equity ratio particularly. This research is intended to help fill this gap. The question as to the influence of tax rate as well as influence of R&D taxation programs on capital structure will be studied via the econometrics approach - that is, through panel regressions. The time frame to be considered is from 2012 until 2015. Four hypotheses connected with taxation influence on capital structure in BRIC countries were investigated. These hypotheses differ according to which indicator of the structure of capital is taken as the basis of the analysis. This investigation may be useful for governments or other analysts to estimate ETR influence on capital structure choice and assist in making a decision between increasing the tax rate (and thereby collect more taxes) versus stimulating companies to take on less debt and less risks. The results highlighted in this paper show an absence of significant impact vis-a-vis the tax rate on the capital structure and also indicate an absence of a significant impact of tax incentive programs on capital structure.