This thesis studies the impact of Taiwan’s Alternative Minimum Tax on im-plicit taxes, applying an OLS linear regression model and the quantile regression analysis. The sample consists of 594 Taiwan’s listed corporations, covering the period from 2003 to 2008. The estimated results showed that before the implementation of the Alternative Minimum Tax, gains from transaction in securities, research and development expenses and risk-adjusted pre-tax return of the stock carried a signifi-cant negative correlation, consistent to the expectations from implicit tax theory. With the enforcement of the Alternative Minimum Tax, the negative association among gains from security transaction, research and development expenses and risk-adjusted pre-tax return of the stock still existed but of a lower magnitude. The Alternative Minimum Tax lowered the effect of tax-saving measures thus the size of the implicit tax.
This study also found that risk-adjusted pre-tax return in the fifty percent and ninety percent quantile of the sample companies paid significant implicit taxes where for other quantiles, no implicit tax effect was found. The OLS regression model may not provide an accurate estimation of implicit tax for our sample.
