Actual Tax Research Articles

Assessment of social demand for environmental and cultural heritage preservation: evidence from a discrete choice experiment in Tunisia

Weighing cultural legacies is crucial to better understand the opportunity costs of lagoon restoration. It may be necessary for local populations whose wellbeing and culture are closely linked to heritage. This paper investigates the preferences and willingness to pay (WTP) of local fishermen for contributing to the restoration of the Bizerte lagoon (Tunisia, North Africa) and the management of the Manzel Abderrahmen harbor through the implementation of the EcoPact project. For this purpose, a discrete choice experiment (DCE) survey was conducted in the port with 50 local fishers. The results of this work represent a particular contribution to the literature as they offer a different perspective on the willingness to pay for the benefits of Cultural Bequest. Manzel Abderrahmen fishermen view “port organization” as an economic, cultural, and recreational attribute that drives their choices. The fishermen showed their willingness to accept all the taxes mentioned in the questionnaire and to increase the actual tax (9%) up to 13% over 5 years to complete the design of their port. This suggests that decision-makers should be aware of the omitted legacy values that could influence subsequent decision-making.

Taxed fairly? How differences in perception shape attitudes towards progressive taxation

Abstract Empirically, the poor are more likely to support increases in the level of tax progressivity than the rich. Such income-stratified tax preferences can result from differences in preferences of what should be taxed as argued by previous literature. However, it may also result from income-stratified perceptions of what is taxed. This paper argues that the rich perceive higher levels of tax progressivity than the poor and that tax perceptions affect individuals’ support for progressive taxation. Using data from an Austrian survey experiment, we test this argument in three steps: First, in line with past research, we show that individuals’ income positions are connected to individuals’ tax preferences as a self-interest rationale would predict. However, second, we show that this variation is mainly driven by income-stratified tax perceptions. Third, randomly informing a subset of the sample about actual tax rates, we find that changing tax perceptions causally affects support for redistributive taxation among those who initially overestimated the level of tax progressivity. Our results indicate that tax perceptions are relevant for forming tax preferences and suggest that individuals are more polarized in their perceptions of who pays how much taxes than in their support for who should pay how much tax.

Does the environmental protection tax reduce environmental pollution? Evidence from a quasi-natural experiment in China.

The environmental protection tax (EPT) is an important environmental policy in China. However, it remains unclear whether the EPT has reduced environmental pollution effectively since its implementation in 2018. Based on the panel data of 229 prefecture-level cities in China during 2015-2019 and the difference-in-differences (DID) model, this study empirically assesses the causal effect of the EPT on environmental pollution. It is found that the EPT has a significantly negative effect on industrial sulfur dioxide (SO2) and industrial soot (dust) emissions but has no significant impact on industrial wastewater emissions. The mechanism analysis reveals that the EPT has the tax enforcement effect and energy efficiency effect, that is, the EPT reduces pollution emissions through increasing actual tax burden and improving the efficiency of energy utilization. However, the innovation effect is weak, which is only effective in reducing industrial SO2 emissions. Finally, we compare how different types of cities responded to the EPT. The results show that the EPT has limited effect on environmental pollution in large cities and southern China.

Refusing to Pay Taxes

Abstract: Conspiracy theorizing can motivate non-normative intentions (e.g., tax evasion and violence). However, less is known about the contributors of these conspiracy-inspired intentions or if they translate into behaviors. Two studies ( N = 1,155) found a positive correlation between loneliness and conspiracy theorizing, which in turn related to non-normative intentions. Study 3 ( n = 234) provided further evidence of these relationships through serial mediations: participants who remembered a lonely experience (vs. control) reported feeling lonelier, which was positively linked to conspiracy beliefs, and subsequently associated with non-normative intentions and a new behavioral measure (actual tax evasion). While our findings consistently link loneliness to conspiracy theorizing and non-normative actions, future research utilizing longitudinal designs would bolster confidence in our theoretical framework.

Tax designation effects on compliance: An online experiment with taxpayers

Tax designation has been a popular attribute of the tax plans in a rising number of countries, yet evidence of its effects on tax compliance remains scarce. We conduct an online experiment with 830 Czech taxpayers who are self-employed or standard employees. Our approach mimics the actual tax designation mechanism: it allows subjects to express their preferences for how a part of their taxes is used by redirecting some of the money to a non-governmental organization (NGO). We exogenously vary the presence of the tax designation mechanism, the possibility to choose the recipient NGO from a list, the tax rate, and the use of tax revenues. We find no consistent significant effects of the tax designation mechanism on overall compliance, though for employees, we do find a small effect on the probability of them being fully compliant. This result complements previous findings of experiments with students, who, like employees, also do not personally file their tax returns. Our results imply that the tax designation mechanism does not encourage higher compliance among taxpayers with the greatest opportunities for tax evasion in a short-term horizon.

THEORETICAL INSIGHTS INTO ACCOUNTING AND RECORD-KEEPING REQUIREMENTS UNDER THE GOODS AND SERVICES TAX ACT IN INDIA

In India, the implementation of the Goods and Services Tax has an effect on a wide range of businesses. Goods and Services Tax reform eliminated Indias major indirect taxes such as Excise, Service Tax, and VAT, among others. It has also led to a change in the system of finalisation of accounts. Accounting treatment of GST is simpler than that for the older regime, due to the lesser number of taxes to account for. However, institutions need to be wary of GST record-keeping and GST Accounting measures to maintain compliance. GST implementation will have profound and far-reaching effects on a companys operations, necessitating a complete overhaul of the companys business, finance, financial reporting, and accounting systems. As management teams continue to assess these changes, they will need to consider changes in financial reporting as well as indirect tax accounting. The purpose of this research is to discuss the various types of business transactions involving Goods and Services Tax and their accounting treatment in the books of accounts and their compliances. This article also examines some of the most significant GST accounting and compliance changes. KEYWORDS: GST, Accounting, Compliances, Accounts and records.

Local government debt and corporate tax burden: A perspective based on the trade-off of government tax collection and management.

As an important source of local fiscal revenue, will enterprise tax be affected by local government debt? What role do the government's tax collection and management motives and behaviors play in this effect? By investigating the impact of local government debt on the actual tax burden of enterprises, this study shows that local governments have a trade-off of tax collection in the process of resolving the debt repayment pressure. The study finds that, in general, the expansion of local government debt has increased the actual tax burden of enterprises, which is mainly reflected in non-state-owned enterprises and enterprises that are collected and managed by the local tax department. The results of the mechanism test show that local debt pressure will encourage local governments to adjust the intensity of tax collection and tax incentives, and then increase the level of tax burden of enterprises in the jurisdiction. Furthermore, the heterogeneity test that distinguishes the institutional environment shows that there are significant differences in the taxation behavior of local governments and the impact of the corporate tax burden in different regions. Specifically, the strict tax behavior of local governments is more significant in regions with better institutional environment, while regions with worse institutional environment, due to the lack of market competitiveness, are more inclined to provide a relaxed tax collection environment to enterprises in their jurisdiction, so as to stabilize the tax base and resolve debts through long-term tax growth. In the context of unbalanced regional development, this study provides empirical evidence that the expansion of local debt affects the taxation behavior of local governments, and then affects the actual tax burden of enterprises in the jurisdiction, which is helpful to understand the government behavior during the transition period of developing countries, and provides policy implications for improving the public debt management system, creating a fair tax environment, and promoting high-quality economic growth.

Tax evasion, fiscal policy and public debt: Evidence from Spain

We reconsider the macroeconomic effects of fiscal policy in an estimated dynamic stochastic general equilibrium model with limited tax enforcement. The results of the Bayesian estimation provide evidence in favor of a sizeable underground sector in Spain, with the associated tax evasion having contributed, on average, to 23% of public debt accumulation over the period 1985–2015. From the standpoint of fiscal policy, the estimated results show that the presence of tax evasion triggers a resource-reallocation mechanism that dampens the effects on economic activity caused by an increase in government spending, while it amplifies those due to changes in tax rates. Because of this mechanism, we show that tax-based consolidation plans may become completely ineffective in reducing the debt-to-GDP ratio if tax enforcement is imperfect. Moreover, by characterizing the long-run Laffer curve, we show that the actual taxation in Spain is inefficiently too high, in the sense that the government might increase tax revenues by cutting the actual tax rates on both corporate and personal income.

TAX HEAVENS: THEORETICAL GUIDELINES

The main purpose of this paper is to study the concept and aspects of tax havens and the attempt of companies with significant revenues to avoid taxation, their causes, trends and effects in the European Union (EU) resulting from tax avoidance or tax evasion behavior. These phenomena were triggered by several factors. The purpose of this study is to identify the major determinants of tax havens in the current economic context. In recent years, the international and European tax policy debate has focused on tax avoidance strategies. Attempts and cases of tax evasion have become more frequent. The development of tax havens has been favored by some macroeconomic factors, but also by the tax non-compliance behavior of companies and individuals looking for different ways to avoid taxation. We examine the theoretical implications of tax haven operations on the actual tax burdens of companies based in Europe. One of the factors that has a major contribution to the development of the orientation trend of multinational and national companies with significant revenues made on the territory of the EU is the degree of taxation. Although this level of taxation differs from one country to another, it is a significant one and is the main pillar on which tax havens are based. This expansion of the phenomenon of avoiding taxation by transferring income to tax havens generates negative effects in the European economy, which leave their imprint on the economy more and more. Since the phenomenon of tax avoidance by directing companies to tax havens cannot be eradicated, it is very important to find measures to limit it. In this context, at the level of the European Union, concerns have arisen for the development of a conceptual, institutional and legislative framework to mitigate these phenomena as much as possible. This phenomenon occurs both within the European Union and globally. The European Union together with the Member States must work more and collaborate internationally to limit the orientation of companies towards tax avoidance by transferring profits to tax havens. In the general context of the globalization of the world economy, the governments of countries that want to increase their tax revenues hit a significant obstacle called “tax havens”. The main finding of this approach is that the EU together with other OECD member states are making diplomatic and legislative efforts to limit as much as possible the tendency to avoid taxation.

Tax incentives and upward R&D manipulation – evidence from the R&D tax deduction policy in China

PurposeThis paper investigates whether China's R&D tax deduction policy triggers firms to manipulate their R&D expenditures upward.Design/methodology/approachThis paper employs the ratio of actual tax savings as a proxy for the benefits of the R&D tax deduction policy based on manually collected and systematically cross-checked data. The relationship between tax benefits and abnormal R&D spending is estimated in a sample of Chinese A-share listed companies for the period 2007–2018.FindingsThe findings suggest that tax deductions lead to positive abnormal R&D spending and that this deviation in R&D spending may be attributed to firms' upward R&D manipulation for tax avoidance. The results also indicate that this behavior is more significant for the period after the policy revision, in non-HNTEs (high and new technology enterprises), and in firms with a high ratio of R&D expenses.Research limitations/implicationsIt is difficult to establish a sophisticated and unified model to identify the specific strategy of upward R&D manipulation that firms use to obtain tax benefits.Practical implicationsManagers should take into account upward R&D manipulation when designing governance mechanisms. Policymakers in developing countries may further pursue preferential tax policies that cover every stage of innovation activities gradually; the local provincial governments need to leverage their proximity and flexibility advantages to develop a tax collection and administration system.Originality/valueThis study contributes to the understanding of the complex effect of R&D tax incentives and helps more fully illuminate firms' upward R&D manipulation behavior from the perspective of tax planning strategies, which are underexplored in previous research.

Gross turnover assessment and tax compliance in Uganda’s small businesses: a deep inquiry on the certainty of presumptive tax law

PurposeThis study aims to investigate the certainty of small business (SB) taxpayers about the presumptive tax law concerning the assessment of income tax based on gross turnover and how this impacts their income tax compliance.Design/methodology/approachThe study adopted the exploratory research design. The saturation point was attained upon interviewing nine owners of SB enterprises, eight tax officers from the Uganda Revenue Authority and eight tax consultants. Themes were identified and explained using verbatim texts from the various interviews. Data were analyzed using the content analysis technique.FindingsThe findings indicate that SB taxpayers are uncertain about the nature of the presumptive tax, that it is assessed based on annual sales, indicators used to determine gross turnover and their actual tax liability. This has occasioned resistance to the tax system and inhibited voluntary compliance. SB taxpayers thus opt to wait for the tax officers to make tax assessments. However, they have used this opportunity to bribe or bargain with tax officers to pay low amounts in tax or no tax at all. Thus, policymakers and revenue authorities ought to concentrate on creating massive sensitization of the law on presumptive tax, in this case, the existing tax base on which the tax is imposed and its elements to improve income tax compliance of SBs.Research limitations/implicationsThese results are relevant to policymakers and Revenue authorities in developing countries, especially in Africa, in improving income tax compliance of SBs.Originality/valueThis study examines the contribution of certainty of the income tax law on the tax base (gross turnover) on which presumptive tax is imposed to income tax compliance of SBs, which has hardly been covered in previous studies.

Optimal nonlinear taxation: a simpler approach

The typical method of solving for the optimal nonlinear tax schedule relies on deriving optimal incentive-compatible allocations. While this “primal approach” is mathematically rigorous, it lacks intuitive appeal. This paper considers a different method that relies on directly solving for the optimal tax system. This “dual approach” is much closer to actual tax policy as it centers around the welfare effects of tax reforms. I show that it can easily incorporate preference heterogeneity, as well as individual utility misoptimization. Beyond solving for the optimal tax system, the dual approach allows one to obtain insights into the welfare effects of small nonlinear tax reforms outside the optimum.

The Arrival Of The New Beps Pe Clause In Actual Tax Treaties Via The Mli: Impact, Risks And Need For Further Regulatory Changes (Particular Focus On Spain)

The present article seeks to analyse the overall potential impact that the new permanent establishment (hereinafter PE) concept that has emerged from the Base Erosion and Profit Shifting (hereinafter BEPS) Project is expected to have as it is gradually incorporated into actual tax treaties worldwide by using Spain as an illustrative example. Firstly, the role that the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (hereinafter MLI) is playing in the implementation of the new rule in tax treaties will be analysed (section 1). Secondly, the wording and scope of the new PE clause will be scrutinized, highlighting its obvious resemblance to ideas foreseen in both prior versions of the Commentaries to the Organization for Economic Cooperation and Development Model Convention (hereinafter OECD MC) and certain domestic administrative resolutions and judgments (e.g., the ‘Spanish PE approach’, a doctrine widely held by the Spanish tax administration and some courts advocating for a singular interpretation of the PE clause and the rules attributing profits to it) (section 2). Thirdly, there will be an attempt to advance the effects of the arrival of the new clause in actual tax treaties in terms of the expected volume of affected treaties, the expected reaction of tax administrations and courts (in respect of unaffected treaties keeping the classic version of the PE concept), the potential coexistence between the new treaty PE rule and current domestic PE rules and, lastly, the expected (extra) tax revenues for jurisdictions hosting these new forms of PEs (section 3). The intention throughout the contribution is to portray the risks derived from the implementation of this new rule and the need for further regulatory modifications to counteract such risks. Finally, some final remarks will be put forward (section 4). Digital nomads’, work mobility, international taxation, tax residence, employment income, digital economy

Gaming the IRS’ Third‐Party Reporting System: Evidence from Pari‐Mutuel Wagering

ABSTRACTThis study examines whether taxpayers intentionally avoid Internal Revenue Service (IRS) third‐party reports. In 2017 an IRS amendment created a quasi‐exogenous shock that reduced third‐party tax reporting of pari‐mutuel gambling winnings from certain types of wagers. I consider the effect that this rule change had on taxpayer behavior. Using a difference‐in‐differences research design comparing thoroughbred racing in the United States to Canada, I find a 27% increase in gambler's investment into wager‐types that became less likely to trigger third‐party reports. Further, I provide evidence that this effect was because of third‐party reporting, not withholding, and was stronger in more informed gambling populations. These findings suggest that taxpayers knowingly avoid third‐party reports, enabling underreporting of income to the IRS. This has important policy implications because underreported individual income is the largest driver of the $496 billion annual gap between legal tax liability and actual tax collections in the United States.

Taxing bitcoin: Incentivizing the difficulty adjustment mechanism to reduce electricity usage

This paper develops a model of the bitcoin market that views the bitcoin as a tradeable commodity whose supply is managed by the Bitcoin protocol. Miners utilize equipment and electricity to solve complex computational problems and the first miner to solve a problem is rewarded with bitcoins. The protocol adjusts the difficulty of the problem to target a constant growth rate in the supply of bitcoins over time. The model demonstrates that an increase (decrease) in the difficulty works in effect like a government’s placing an ad valorem tax (subsidy) on the price of a commodity. The rents that would have arisen from limiting supply, however, are wasted as electricity costs. It is shown that an actual tax on the price of the bitcoin can be used to displace the electricity costs. Using data from March 2014 to January 2019, it is estimated that the difficulty adjustment mechanism resulted in net welfare losses to the miners and buyers of bitcoins of 373.8 million USD. Average initial tax rates of 35% and 347.5% would have fully displaced the electricity costs and maximized their reduction, respectively.

Modified Burr Xii Distribution: Properties and Applications

Creating suitable, data-friendly models to interpret statistical data has been a goal of numerous researchers. Even new generalizations of models with several parameters are developed to handle complex data. The Burr XIII distribution has been utilized extensively in software reliability, failure censored plans, future observables prediction, ball-bearing loss, tax revenue, etc. Abdel-Ghaly et al.(1997), Wu and Yu (2005)), AL-Hussaini (2003), Shao Q. et al. (2004), Mead M. E. (2014). This article suggests changing the Burr XIII (MB XIII) distribution. The projected distribution is more adaptable and manageable than the Burr type XIII (B XIII) distribution and its parent. The proposed distribution's characteristics are deduced in some cases. To demonstrate its utility, we compare Burr XIII and its sub-model to real-world data sets, ball-bearing failure metrics, and actual tax revenue data (in 1000 million Egyptian pounds).

ДЕЙСТВИТЕЛЬНОЕ НАЛОГОВОЕ ОБЯЗАТЕЛЬСТВО ОРГАНИЗАЦИИ ПО НАЛОГУ НА ПРИБЫЛЬ: ПРОБЛЕМЫ ТЕОРИИ И ПРАКТИКИ

The subject of the study is the mechanism used by tax authorities to charge income tax to organizations. The relevance of the study is due to the systematic incomplete accounting by the tax authorities in the implementation of tax control of expenses incurred by organizations that overestimate their financial results, leading to the economically unjustified and excessively high direct taxation in all types of economic activity. The purpose of the study is to form a direction for improving the mechanism for calculating corporate income tax used by tax authorities in the implementation of tax control and changing tax practices. The study used an analysis of the legal and regulatory framework, tax practice and economic publications on the mechanism of calculating corporate income tax by tax authorities. The result of the study is the conclusion that in the Russian tax systemwhen exercising tax control there is a constant presence of incomplete accounting by tax authorities of expenses incurred by organizations. Such an approach on the part of the state entails an artificial overestimation of profits and economically unjustified excessively high direct taxation. The practice of tax control contradicts the theory of taxation, the conclusions made in economics, the name and economic essence of the income tax. Changes in the practice of profit taxation should exclude arbitrary manipulation with expenses of organizations for tax authorities. The conclusion is made about the need to change the practice of taxation, the importance of the formation by the tax authorities of the actual tax obligations of organizations for income tax based on the actual profit received using the calculation method for the full determination and accounting of all expenses incurred by the taxpayer

Poslovne i institucionalne determinante efektivnih poreskih stopa u bankama u Republici Srbiji

The objective of the current paper is to study the influence of the selected business and institutional determinants on the annual effective tax rates in banks in the Republic of Serbia (RS). Panel data regression models are applied on 113 observations, covering the period from 2017 to 2021, where the accounting and current effective tax rates are used as a measure of the actual tax burden. The results show that the effective tax rate in banks in RS is significantly below the statutory level. Furthermore, for each data set, the coefficients of changes in the effective tax rate are calculated, and the most adequate model is selected using the Hausman and Breusch-Pagan tests. In the first model, the biggest change in the effective tax rates is caused by change in leverage, merger and aquisition processes and the bank size. The presence of loan loss provisions in the model completely highlights the impact of profitability and leverage. Finally, in the last model, banks with a profit before tax can manage effective tax rates and tax burdens by regulating capitalization levels. The results of this study are of interest for economy creators and for business managers in banks, helping them in effective tax planning and managing the results.

ANALISIS PERHITUNGAN POTENSI PAJAK DAERAH KABUPATEN/KOTA DENGAN METODA STOCHASTIC FRONTIER ANALYSIS (SFA)

To increase local tax revenues, the initial steps that need to be done by local governments is to estimate their local tax potential. By using the Stochastic Frontier Analysis (SFA) method, this study tries to: (1) estimates local tax potential from each region/city and answer the question (2) have each of the regions reached its maximum potential? The results of this study aim to provide an alternative model/method of calculating the local taxes potential for a local government. In addition, for the central government, the local tax potential figures will be used as the fiscal capacity component instead of revenues realization in General Allocation Fund (DAU) formulation. The results from the SFA method are: (1) from the 504 local governments, on average, the Actual Tax Ratio (TRA) is 0.37%, while the Potential Tax Ratio (TRP) is 0.48 %. So only about 73.31% of local tax potential can be collected by the local governments. (2) The majority of the top ten ranked local governments that have the largest TRP, are local governments with an urban character and tourist areas, with a TRA range between 1.48% to 6.72%, and a TRP between 1.78% to 7.66%. So that the local tax potential that has been collected is about 80%. (3) On the bottom rank regions that have the lowest TRP, 8 out of 10 local governments are located in Papua with TRA ranges between 0.01% to 0.06% and TRP between 0.02% to 0.11%. So that the local tax potential that has been collected is in the range of 32% to 83%.

Дискусійні аспекти та наслідки використання концепції податкових витрат

Introduction. The development and implementation of the concept of tax expenditures laid a solid foundation for not only tax, but also budget reforms, the ultimate goal of which is to increase the efficiency of budget funds. Despite this positive aspect of the concept, it has been the subject of heated debate since its inception. Problem Statement. Discussions about the concept of tax expenditures are not familiar to most Ukrainian scientists and practitioners, but they are important for understanding its essence and importance for the formation of a balanced and transparent tax policy and public administration system. The purpose of the article is to analyze the controversial aspects of the concept, as well as the consequences of its introduction. Methods. General scientific methods of cognition are used: critical analysis of the controversial provisions of the concept of tax expenditures; combination of historical and logical, abstract-logical and concrete. Results. The most problematic aspects of the concept of tax expenditures, which have become the object of its criticism, are analyzed: approaches to determining the benchmark tax system and tax expenditures, as well as methods of their measurement. It has been established that various scientists propose to define the benchmark tax system (structure) on the basis of one of three approaches: normal or normative tax system; benchmark tax system and compromise of the actual (current) tax system and the theoretical ideal. The reasons for criticism, as well as arguments “for” and “against” the existing approaches are revealed. The shortcomings of the most common method of measuring tax expenditures – the revenue forgone method, which does not provide an accurate measurement of budget losses, are analyzed. The reasons for a critical assessment of the consequences of application the concept of tax expenditures in the context of achieving the goals set when it was introduced – narrowing the system of tax benefits, improving the process of forming fiscal policy, increasing the transparency of tax expenditures – are revealed. Conclusions. It is concluded that critical evaluations of the consequences of applying the tax expenditure concept cannot override its positive impact on tax policy and the tax system, and the main directions of this impact are identified. The trends in the development of the concept of tax expenditures on the basis of generalization of changes that have occurred in the process of its application in different countries are highlighted.