Effects of Corporate Tax on Economic Activity in Pakistan

The purpose of this paper is to study the corporate tax on the economic activity. Economic activity is observed through real Gross Domestic Product (GDP), Consumption (C), Household expenditures and government expenditures. Corporate tax is dependent variable while real Gross Domestic Product (GDP) government expenditures, household expenditures are taking as independent variables. Time series data from 1990 to 2019 has employed for empirically study. Ordinary least square technique is used to estimate the influence of corporate tax on economic activity. Results show that corporate tax has adverse effects on the gross domestic product (GDP) and household expenditures while positive effects on the government expenditures. Distortions are created by the corporate tax, in which domestic distortions are described.