International Journal of Business and Economics Research 2019; 8(4): 192-200 http://www.sciencepublishinggroup.com/j/ijber doi: 10.11648/j.ijber.20190804.14 ISSN: 2328-7543 (Print); ISSN: 2328-756X (Online) Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe Leonard Mushunje Department of Applied Mathematics and Statistics, Midlands State University, Gweru, Zimbabwe Email address: To cite this article: Leonard Mushunje. Modelling the Effects of Variations in Corporate Tax Rate on Revenue Output in Zimbabwe. International Journal of Business and Economics Research. Vol. 8, No. 4, 2019, pp. 192-200. doi: 10.11648/j.ijber.20190804.14 Received: May 10, 2019; Accepted: June 24, 2019; Published: July 9, 2019 Abstract: Corporate tax, has significantly become one of the major sources of revenue to the government. Whether the economy is shadow, enriched or booming, its government needs some revenue to promote and to lubricate its formal sector. Because of this, corporate tax at varying rates are being agreed and set by Zimbabwean government. However, less on the effects of corporate tax on revenue yields seems to be known and understood in Zimbabwe. Our conjecture was to study the effects of varying corporate tax rate on revenue. We used the simple logistic harvesting model with varying effort coefficient. Quantitative, qualitative and geometric methods were used for model results and analysis. The research was more of theoretical with a small data set used only for validating the polynomial estimation model. Interestingly, all the methods seem to move in the same direction. The results suggest that revenue is inversely related to company tax. Lastly, we used a Lagrange polynomial to predict possible revenue output from any given corporate tax rate. So, the government can use the polynomial framework when considering a revenue-neutral tax reform to apply to its economy. To validate the polynomial function, we applied the mean absolute percentage error method which supported its use. Keywords: Corporate Tax Effort, Lagrange Polynomial, Revenue, Output, Simple Logistic Harvesting Model, Variations 1. Introduction Revenue needs have become more significant across the world due to dynamic nature of economies. Because of this, different revenue avenues have emerged so as to meet these needs. One of the interesting avenues is taxes. According to the organization for economic co-operation and development a tax is a compulsory, unrequited payment to the general government [1]. James and Nobes, supports that a tax is a compulsory levy made by public authorities for which nothing is directly received in return [2]. Therefore, taxes are transfers of money to the public sector but they exclude loan transactions and publicly produced goods and services. Taxes fall under two broad heads that is direct and indirect taxes. Direct taxes are those whose burden is directly born by the tax payer and contrary to these taxes is where the burden is transferred to others or public and are specially called indirect taxes [3]. Direct taxes include corporate income tax, personal tax, property tax and fringe benefit tax, whereas indirect taxes include value added tax (vat), excise duty and customs duty, all among others. We shall focus on one direct form of taxation which is corporate tax. It is the money paid by registered companies to the general public from their available profits. The government aim to harvest as more revenue from companies as possible. However, the reverse seems to be happening in Zimbabwe following different reasons. “Announcements of changes in corporate taxation often attract sizeable media attention. There are a number of potential reasons for that, but above all it is the frequency with which these changes occur. And they all seem to go in the same direction that is towards a reduction in the corporate tax burden. Recent vet prominent examples are, the united kingdom reducing its rate from 30% to 28% for the fiscal year 2008, Germany from 33% to 27.5%” [4]. This apparent pattern has triggered considerable discussions among policy makers and academicians as to whether we are experiencing tax competition which may undermine the ability of countries to tax corporate income. This seem to be not non-common in our country context where most firms are hiding in the underground economies posing an unfavorable environment for taxation. Extending this, Zimbabwe has its own mechanisms of tax regulations, rates (tax regimes) which are