Marginal Effect of Direct Tax on Profits: A Study on the Taxation of the Finance Industry in Brazil

摘要

This article addresses the direct taxation on banks' profits in Brazil and tests the influence of net fiscal adjustment (NFA) on direct tax on profit (DTP) by introducing the marginal effect of direct taxation (MgET). Measuring DTP is a complex process that involves adjustments in fiscal accounting procedures to recognize economic transactions by using specific standards. Besides fulfilling the objectives of identifying recognized direct tax (RT) and calculating NFA, MgET is identified by the algebraic sign of NFA, which is the sufficient, necessary and only condition to evaluate the existence of cash synergy/entropy in firms, with the reduction/increase of DTP. By using a sample containing data from the 40 biggest banks in Brazil, from 2010 to 2017, under the positivist methodology, the research results are strongly robust in indicating that NFA has a significant impact on DTP and on MgET, producing cash synergy.