The Bucharest Academy of Economic Studies

Abstract: In the global economy, taxation is an important factor in the decision making process, especially for investment projects implementation in one state or another. Therefore, the level of corporate tax, providing tax relief, tightening the tax system may be elements that lead to fiscal competition between states to attract investments. Therefore, not the statutory tax rate, but the effective tax rate on profit is relevant in determining the tax benefits for a country. This paper aims to analyze the relationship between effective tax rate and statutory rate, based on the results recorded by the companies listed on Bucharest Stock Exchange during the period 1997-2009. It demonstrates that the unique statutory tax rate is a theoretical concept, and the effective rate differs from this level. Basically, the key element in calculating the corporate income tax is given by the deductibles