THE IMPACT OF CORPORATE TAXATION ON BUSINESS INVESTMENT DECISIONS: A COMPARATIVE STUDY OF DEVELOPING AND DEVELOPED ECONOMIES

AUTHOR – MANSI PAL* & VATSAL CHAUDHARY**,

* STUDENT AT LAW COLLEGE DEHRADUN, UTTARANCHAL UNIVERSITY, DEHRADUN, UTTARAKHAND, INDIA.

** ASSISTANT PROFESSOR AT LAW COLLEGE DEHRADUN, UTTARANCHAL UNIVERSITY, DEHRADUN, UTTARAKHAND, INDIA

BEST CITATION – MANSI PAL & VATSAL CHAUDHARY, THE IMPACT OF CORPORATE TAXATION ON BUSINESS INVESTMENT DECISIONS: A COMPARATIVE STUDY OF DEVELOPING AND DEVELOPED ECONOMIES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (10) OF 2025, PG. 445-448, APIS – 3920 – 0001 & ISSN – 2583-2344

Abstract

Corporate taxation plays a pivotal role in shaping business strategies, especially in the area of  investment decisions. This paper investigates the relationship between corporate tax rates and  investment behavior in both developing and developed economies. Drawing on data from OECD  and BRICS nations over the past two decades, the study analyzes how tax structures influence capital  allocation, foreign direct investment (FDI), and innovation expenditure. The findings indicate that  while lower corporate tax rates generally stimulate investment, the impact is significantly mediated  by the legal infrastructure, political stability, and enforcement mechanisms in place. In developing  countries, inconsistencies in tax enforcement and policy volatility tend to dampen the positive  effects of lower rates. Conversely, developed countries exhibit a more predictable response pattern,  with firms increasing reinvestment and R&D in response to tax incentives. The paper concludes by  recommending tailored tax reforms that consider institutional capacities and economic maturity to  enhance investment outcomes across different economies.