Integrating Islamic Principles of Taxation within China – An Analysis of its Impact on Corporate Earnings

Authors : Klemens KATTERBAUER, Hassan SYED, Sema YILMAZ GENÇ, Laurent CLEENEWERCK

Pages : 104-110

View : 63 | Download : 59

Publication Date : 2023-06-30

Article Type : Research Paper

Abstract :Taxation represents a cornerstone for corporations to optimize their taxation expenditures and minimize their impact on their earnings. Corporations aim to optimize their earnings distributions to minimize the overall amount of tax paid. The Islamic taxation system differs substantially from conventional tax systems across the globe in terms of the scope and purpose of the taxes. The article evaluates the impact of Islamic taxation on the earnings and taxation levels of major corporations in China. The results indicate that interest earnings and expenditure concerning income are major distinguishing factors for Islamic compliance. The conclusions were then integrated into an artificial intelligence framework to estimate the taxation amounts and compare them with the total tax paid by the corporations. The results indicated that corporations may pay overall slightly higher rates but that for the majority of corporations, the taxation levels will remain identical. Amongst others, those corporations with significant interest expenditures may experience higher taxation if those expenditures are not set off by other expenditures or Islamic-compliant costs associated with liabilities. The results indicate the opportunities for corporations to optimize their taxation bases within China.
Keywords : İslami Vergilendirme, İslam Hukuku, Çin Vergilendirmesi, Şangay Menkul Kıymetler Borsası