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Advance Income Tax: The Case of Ecuador

Abstract:

In this article study the payment of an advance tax and its influence in return on assets and return on equity. We employ data from ecuadorian companies from 2007 to 2014. The implemented methodology was a panel data regression to check if the early tax is important to explain the ROA or ROE. The rest of the variables are size, leverage and the ratio of current and fixed assets to total assets. The results evidence there is no relationship between the payment of advance tax and ROA or ROE in the Ecuadorian companies. Leverage is the only variable with statistical relevance in the regression. This result shows the calculation formula is important to determine the effect of taxes on profitability.