Firm Manipulation and Take-up Rate of a 30 Percent Temporary Corporate Income Tax Cut in Vietnam

This paper documents firm take-up rates and manipulation around the eligibility thresholds of a 30 percent temporary corporate income tax cut in Vietnam in 2009 and in 2011. The tax cut program was only available for firms with less than certain employment or asset cutoffs. I use regression discontinuity design and difference in differences approach to compare firms right below and above the cutoffs. The takeup rate among eligible firms was about 40 percent. I do not find evidence for takeup among ineligible firms. In addition, I find that firms might have misinterpreted and used incorrect eligibility rules. Finally, I do not find evidence that ineligible firms manipulated to qualify for the tax cut. Therefore, the tax cut program did not occur additional costs because of ineligible firms or manipulation.