A higher corporate tax burden (TB, CTB) in the presence of inflation have long been viewed as an interesting topic of many researchers as well as practitioners. Hence, firms make constant efforts to mitigate this distortion by investing intellectual capital (IC) because these assets allow them to ignore “the matching concept” in accounting standards. This paper investigates the role of IC as well as intellectual property rights (IPR) reform in mitigating inflation-related tax distortions, using a panel dataset extracted from non-financial listed firms in Vietnam during the period from 2011 to 2018. Adopting the fixed- and random-effect regressions to analyse a sample of 932 firm-year observations, the study finds that inflation distorts the real CTB when tax deductions are based on historical cost. More importantly, these distortions, however, are mitigated by investing in IC as well as reforming IPR at firm and country level, respectively. The findings are valuable at both theoretical and practical significances. For theoretical contribution, this research provides empirical evidences to current literature because it is one of the first papers focusing on the role of IC in mitigating tax distortions in Vietnam. In addition, compared to existing studies, we apply the valuation theory to measure CTB instead of finance theory. For practical contribution, companies can make decisions related to invest in IC.
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