Template-Type: ReDIF-Paper 1.0
Author-Name: Nam T. Vu
Author-X-Name-First: Nam T.
Author-X-Name-Last: Vu
Author-Email: vunt@miamioh.edu
Author-Workplace-Name: Miami University
Author-Name: Kiet Tuan Duong	
Author-X-Name-First: Kiet Tuan	
Author-X-Name-Last: Duong
Author-Email: kiet.duong@york.ac.uk
Author-Workplace-Name: University of York
Author-Name: Luu Duc Toan Huynh	
Author-X-Name-First: Luu Duc Toan
Author-X-Name-Last: Huynh
Author-Email: t.huynh@qmul.ac.uk
Author-Workplace-Name: Queen Mary University of London
Title: Tax Incentives under Sanctions: Evidence from Russian Tax Authorities
Abstract:  We examine how having access to tax incentives can act as a novel channel through which firms can alleviate the effects of economic sanctions. By leveraging the universe of more than eight million unique Russian firm-year observations from 2000 to 2023, we first construct a novel measure of unexpected firm-level tax incentives orthogonal to firm fundamentals and other predictable incentives. Using such a measure, we show that firms receiving tax incentives the year prior to the sanctions imposed on Russia in 2014 exhibit higher capital investments and returns on assets than firms without such incentives. These improved outcomes are shown to be linked to the corresponding increases in both revenue and profits and a decrease in their overall labor costs ex-post. Such results are qualitatively consistent with a stylized New-Keynesian model where firms are able to leverage unexpected tax incentives to offset production costs.
Length: 55 pages
Creation-Date: 2025-04
Revision-Date: 
Publication-Status: 
Classification-JEL: F51; H25; H71
Keywords: Russian; sanctions; tax incentives
File-URL: http://cgr.sbm.qmul.ac.uk/CGRWP121.pdf
Number: 121
Handle: RePEc:cgs:wpaper:121