Tax Burden Research Articles

"Tax optimization" and its difference from "tax planning"

The article clarifies the content and relationship between the concepts of «tax optimization» and «tax planning». The criteria for distinguishing these concepts are determined. It is established that tax planning is a multi­stage process which includes both strategic forecasting and careful organization of tax liabilities at each level of business. The main goal of this process is to be able to shape the structure and form of the business in such a way that they are optimal from the taxation point of view. Tax planning primarily determines the choice of a business entity’s strategy. Tax planning is defined as an important element of a company’s strategic management aimed at long-term and comprehensive management of tax liabilities. Tax optimization is an important process aimed at adapting the taxpayer to the peculiarities of the current tax system in order to choose the most profitable and efficient taxation regime. This process is not limited to the passive application of tax rules, but involves the active management of tax liabilities within the limits of legally permissible techniques, means and methods. Tax optimization is not only the ability to choose the most favorable conditions from those offered by the legislator, but also the ability to predict and adapt to changes that may affect the tax burden in the future. Tax optimization as a legal tool for reducing the total tax burden is considered exclusively within the framework of legal actions of the taxpayer. A distinctive feature of tax optimization as compared to tax planning is its focus on achieving short- and medium-term goals of a business entity by directly using the opportunities provided by tax legislation. Tax planning, on the other hand, is an element of strategic management aimed at achieving the long-term strategic goals of a business entity. Tax optimization is aimed at developing the most favorable model for fulfilling tax obligations by a business entity without changing the economic substance of business transactions. This approach allows the taxpayer to flexibly adapt to changes in the tax environment, while maintaining the sustainability of financial results and reducing tax costs. Tax optimization is not just a tool for reducing the tax burden, but also an important element of tax planning.

Analisis Penerapan Tax Planning Dalam Mengefisiensikan Beban Pajak Penghasilan Pada PT Sentra Daya Madani

The research aims to analyze application of tax planning in efficiency PT Sentra Daya Madani income tax burden. This research used a descriptive method. Data collection techniques were carried out using documentation, interviews and a literature study. Analysis data by analyzing the commercial financial statement, reconciling fiscal, analyzing fiscal income statement, and making tax planning. The results of this research show that PT Sentra Daya Madani has implemented tax planning, but it has not been optimal, so that the payment of the tax owed is not yet efficient. There are still gaps that can be implemented or exploited to streamline the tax burden paid. The application of tax planning in this research can streamline the tax burden of IDR 9,089,693.

Reduction of the tax burden as a mechanism for stimulating business development in rural areas

The article is devoted to the study of both theoretical aspects of tax stimulation of the development of entrepreneurship in rural areas, as well as the preferential norms for taxation of enterprises that carry out their economic activities in rural areas, provided for in the current legislation of Ukraine, as one of the effective ways of stimulating their development. The relevance of this issue, especially in the conditions of the full-scale armed aggression of the Russian Federation against Ukraine, is confirmed both in scientific circles and by the survey of business representatives, including micro, small and medium-sized enterprises, conducted after the start of the full-scale invasion. The norms of the current legislation of Ukraine on such main directions of tax stimulation of the development of enterprises in rural areas, which were characteristic of the domestic legislation in different periods of its development, were separately studied, such as: write-off and restructuring of tax debt; reduction of the taxation rate by separate taxes; exemption from payment of certain types of taxes and fees (mandatory payments), introduction of special taxation regimes. On the basis of the conducted research, the advantages and disadvantages of each of these mechanisms of tax incentives were analyzed. It was revealed that, as of today, one of the main preferential tax regimes inherent in enterprises carrying out their economic activities in rural areas is a simplified system of taxation, accounting and reporting. Taking this into account, and in the context of government initiatives to impose an additional fiscal burden in the form of a military levy, in particular, on taxpayers of the third group of single taxes, a proposal is made to balance such a burden at least for a part of taxpayers who carry out their activities in the least favorable rural areas, including the territories affected by the consequences of the armed aggression of the Russian Federation against Ukraine, by reducing the taxation rate with a single tax to 2 percent for the period of martial law and for several years after its termination.

Measuring Size and Causes of Shadow Economy in Ethiopia

The paper estimates the size of the Shadow Economy (SE) in Ethiopia from 1995 to 2022 and rigorously tests the statistical relationships between the SE and various causal variables. In order to carry out the comprehensive econometric analysis, a multiple indicator multiple causes (MIMIC) model was effectively applied. The main causes of the Ethiopian SE are carefully analyzed, and several economic policies aimed at reducing it are thoughtfully suggested. An appraisal of the reliability of these estimates is conducted, along with an alternative benchmark strategy for the MIMIC approach that was proposed for enhanced accuracy. The findings reveal that the causal variables, including tax burden, inflation rate, trade openness, and economic freedom, significantly influence the shadow economy. Furthermore, it shows that indicator variables, such as currency in circulation and official economic growth rates, significantly indicate the presence and extent of a shadow economy. Thus, based on the insightful findings of the research, the author recommends that the government increase trade relations with the rest of the world and promote greater economic freedom. It also endorses adjusting inflation and tax burdens to effectively minimize the shadow economy in Ethiopia.

Automatic Exchange of Financial Information from the Perspective of Tax Fairness and Transparency

<p>Tax fairness and transparency concepts have gained increasing prominence in the global tax and financial regulatory landscape in recent years. Automatic Exchange of Financial Information (AEOI) has proven to be an effective tool for implementing these principles. This executive summary briefly overviews the key role AEOI plays in promoting tax fairness and transparency. It explores the mechanisms and framework behind AEOI and highlights its impact on curbing tax evasion and improving the fair sharing of the tax burden between individuals and businesses. Additionally, this summary highlights the implications of AEOI for financial institutions, governments, and taxpayers, and highlights the challenges and benefits associated with its implementation. By considering AEOI from multiple perspectives, this summary aims to contribute to the ongoing international tax discussion and facilitate further research on the multiple dimensions of tax fairness and transparency in the global financial ecosystem.<em></em></p>

Under Treasury Control: Japan’s Emergence as an Egalitarian, Small-government State

This study analyses the formation of a policy system that reduced income inequality in Japan in the 1960s, a period of rapid economic growth. According to comparative research, the Japanese state is an example of small government with income equality. Japan’s income inequality rose in the 1950s, and at that point, the government faced a decision about how to reduce income inequality, and particularly whether to expand social security and government size. This study uses primary materials to analyse how and why Japan became more egalitarian while maintaining a small-government state, focusing on fiscal rules set by the Ministry of Finance, which adopted a balanced budget rule that prevented the issuance of public bonds and limited the tax burden ratio. As reflected in the government’s Income Doubling Plan, this development led to a trade-off among factors, such as social security, public works, and tax cuts, which led to the subordination of social security. Despite public debt issuance in 1965, which was contrary to two fiscal rules, social security did not expand because of fiscal rigidification. Throughout the 1960s, spending on public works and income tax cuts was prioritised over social security, resulting in small government but also income equality.

Tax control and corporate VAT compliance: An empirical assessment of the moderating role of tax strategy

Tax control frameworks (TCF) of higher quality are seen by tax authorities and the OECD as a prerequisite for corporate tax compliance. However, a higher quality TCF can also enable organizations to reduce their tax burden by providing information that allows them to make the best use of opportunities within the boundaries of the tax law. We investigate the effect of TCF quality on tax compliance by looking at the tax strategy of the organization and whether the organization unintentionally or intentionally fails to comply. We focus on Value Added Tax (VAT) and test our hypotheses using a sample of large organizations, using a combination of survey data and tax audit results from the Netherlands. Our results show that a TCF of higher quality is positively associated with VAT compliance, resulting in both less unintentional and less intentional errors requiring tax adjustment. For organizations with a more conservative tax strategy, we find that the quality of the TCF does not affect the level of intentional non-compliance. For organizations with a more aggressive tax strategy, however, the level of intentional non-compliance is conditional upon the quality of the TCF, with a lower (higher) quality TCF leading to more (less) intentional non-compliance.

The impact of new VAT enforcement on financial performance: Evidence from Saudi Arabia non-financial listed companies using the event study and ARMA model

This paper examines the influence of the new 15 % Value Added Tax (VAT) enforcement on non-financial listed companies in Saudi Arabia. By comparing financial data from 2019, before the VAT implementation and the COVID-19 pandemic, with data from 2020, during both the VAT increase and the pandemic, the research aims to uncover the consequences of this tax policy change. Utilizing charts, tables, and an event study analysis approach with the Autoregressive Moving Average (ARMA) model, we investigated key financial indicators such as Shareholders' Equity (SE), Total Income (TI), Total Revenues (TR), Net Income (NI), Total Expenses (TE), Other Changes in Operating Activity (COA), and Cash at the End of the Period (CEP). The findings reveal significant financial impacts, highlighting companies' challenges due to the increased tax burden. Shareholders' Equity dropped from an average of 11.55 million to 4.57 million, and Total Income and Total Revenues decreased from approximately 1.73 million to 316,234 and from 1.95 million to 331,605, respectively. Net Income sharply declined from 406,109 to 74,624, and Total Expenses decreased from about 1.18 million to 223,495. Other Changes in Operating Activity shifted from a negative mean of −168,936 to a positive 523,520, and Cash at the End of the Period fell from 1.99 million to 666,663. These results suggest that the VAT increase has significantly strained companies' financial performance, emphasizing the need to consider such tax reforms carefully, particularly in developing countries. The study concludes that while the VAT increase aims to enhance government revenues, it imposes substantial financial strain on companies, potentially leading to long-term economic repercussions. Policymakers should consider these implications and implement practical measures to optimize the VAT system and support business resilience in the face of such reforms.

Fair Competition Review System and cross-regional capital flow: Evidence from China

Breaking local protectionism and market segmentation to promote the free flow of production factors between regions is crucial for building a unified national market in China. Introduced in 2016, the Fair Competition Review System (FCRS) restricts local governments’ abuse of administrative power to limit competition. The system corrects market failures and weakens regional barriers, establishing market competition by evaluating policies and regulations for anti-competitive practices. This study investigated the impact of the FCRS on cross-regional capital flow through subsidiaries in different regions. Using data from Chinese-listed companies between 2011 and 2022, this empirical study found that capital flow significantly increased after the system's implementation. Cross-regional flow was stronger in areas with higher reduced administrative barriers, lower tax burdens, and lower capacity utilization rates. This suggests that the primary mechanisms driving capital flow were expansion and cost-efficiency improvements. Heterogeneity tests indicate that the system exhibited a stronger impact on promoting cross-regional capital flow for private enterprises and those with low investment efficiency and weaker profitability. These findings suggest that the FCRS effectively regulates administrative monopolies, reduces regional barriers, and facilitates freer capital flow between regions, contributing to a unified national market in China.

Incremental marketization reforms and venture capital strategy adjustments: Based on industrial chain innovation development

Marketization reforms are essential for ensuring long-term development. This paper examines the effect and mechanisms of marketization reforms on venture capital strategy adjustments using panel data from 31 provinces in China from 2010 to 2022. The study finds that marketization reforms have increased the level of venture capital primarily by enhancing industrial chain innovation and reducing tax burdens. Based on the findings, recommendations are proposed to deepen marketization reforms and advance venture capital strategy adjustments in China.

Impact of government’s support policy on decision-making of platform participants under ESG

Blockchain-based token platform economy is a new branch of digital platform economics. Constructing a continuous time dynamic model of token platform economy, this paper analyzes what kind of ESG policy is appropriate for the government, meanwhile the token platform participants (developers, users and speculators) make optimal investments and decisions under ESG policy. Simulation result shows neutral ESG policy is optimal. Based on the given neutral ESG policy, we have done the research on ESG investment and decision strategies for platform participants. Our research shows that the tokens selling rate and efforts of green platform (ESG score greater than 0) developers are lower than the ones of brown platform (ESG score less than 0). Consequently, when developers’ token retention is about half of the initial amount, users should invest more brown tokens. Speculators should invest brown tokens for developers’ high token retention. Green token investments of speculators and users are needed in other cases. Next, the impact of the government’s three ESG policies on the maturity or termination of the platform also been analyzed. An important conclusion occurred: the government’s aggressive or conservative ESG policy cannot make the development of the green platform better; Therefore, we suggest a neutral ESG policy which means that the government could adopt high tax incentive and high tax burden on the green and brown platform while it is not necessary to implement the extra subsidy and punishment policy on the green and brown platform

Does local government debt pressure hamper green transition? Evidence from China

The accumulated local government debt will change government fiscal behavior, which will further impact regional environment performance to a certain extent. However, the literature on how local government debt pressure (LGDP) affect green transition is scarce. By measuring the green transition by green total factor productivity (GTFP), we analyze the effect of LGDP on GTFP. We find that LGDP significantly reduces the GTFP. The negative effect acts through reducing green innovation and loosing environmental regulation. In addition, the negative impact will be more pronounced in cities with weak governance, development, and environmental protection efforts. Finally, enhancing marketization, lowering GDP growth target, and reducing tax burdens can alleviate the adverse effect of LGDP on GTFP. The conclusions of this study provide theoretical support for appropriate government debt governance and have important practical significance for green sustainable development in developing countries.

The Determinants of Fiscal Pressure in a Context of Crisis in the Central African Republic

The Central African Republic is one of the six member countries of the Economic and Monetary Community of Central Africa (CEMAC), and the only non-oil producing country in the community whose own budgetary resources come essentially from taxes. The country's modest budgetary resources are due to the low mobilization of tax revenues, as a result of the under-exploitation of its fiscal potential, linked to that of its economic potential. While the studies carried out on the determinants of CAR's tax burden have made it possible to isolate the long-term structural factors such as GDP per capita, agricultural value added, the degree of economic openness and external financing that influence tax burden, the effects of the socio-political crises that have occurred at various times and sequentially have not been taken into account to assess their short, medium and long-term consequences on the country's tax burden. The aim of this work is to integrate periods of socio-political crisis in CAR into the determinants of tax pressure and to assess their effects on the country's tax mobilization.

A Study on the Change in Perceptions of Welfare Enhancement and Tax Burden Before and After the COVID-19 Outbreak

A Study on the Change in Perceptions of Welfare Enhancement and Tax Burden Before and After the COVID-19 Outbreak

Implementasi Pengelolaan PPH 21, PPH 22, dan PPH 23 di Dinas Pemberdayaan Masyarakat dan Desa Provinsi Riau

PPH ensures that every individual or legal entity that owns wealth contributes to the financing of the state, so that the tax burden is evenly distributed across society and supports economic stability and general welfare. This is achieved by ensuring that any taxable transactions are fairly and clearly assigned to domestic taxpayers or permanent establishments. In addition, it promotes financial stability. Riau Province's Community and Village Empowerment Office conducted this investigation. The study looked at the system and management of PPh 21, 22, and 23 tax burdens. It was conducted from June to July 2024. The Dinas's Financial Data Application (ADK) and Daily and Monthly Transaction Recapitulation (RTHA DTH) used observations, interviews, and instructions to collect data for this study. Preliminary data was also derived from a qualitative descriptive approach. Articles 22 and 23 of Income Tax provide BPKD with the tax payable from relevant transactions, such as the purchase of goods and services, in accordance with the provisions of the applicable tax regulations. This is done to support clear and reliable regional financial management and ensure compliance with tax obligations. Riau Province's Community and Village Empowerment Agency brings together PPH 21, 22, and 23. The reports are sent via DJP Online e-Filing. The purpose of this process is to ensure tax regulations apply to the income of the individual or company being taxed.

Fiscal and Tax Policy of Bogd Khanate of Mongolia (1911–1919)

Abstract As a result of the prolonged struggle for national independence, the Mongolian people, who endured over two centuries of oppression under Manchurian rule, regained sovereignty in 1911 and established the Republic of Mongolia. During this period, significant economic, social, and political reforms were initiated, laying the groundwork for the national financial system. This article examines the social, political, and economic landscape during the Bogd Khanate of Mongolia. Research into the tax and financial policies implemented during this period was conducted using historical documents and sources. Within the framework of Mongolian governmental financial policies, five ministries were established, accompanied by the enactment and implementation of various regulations about finance, taxation, and customs. Efforts were made to enhance state revenue; however, the accumulation of debt owed to foreign moneylenders and merchants, coupled with the taxation burden on Mongolian citizens, including payments to domestic nobles and religious institutions, exacerbated poverty and economic hardship among the populace. In June 1915, the autonomy of Mongolia, as stipulated in the treaty between Russia, Mongolia, and China, was abolished in 1919, resulting in the reassertion of foreign control over Mongolian governance.

On increase of land tax in Kazakhstan

Land tax is one of the sources of formation of local budgets, filling their revenue part. The aim is to analyze the legal framework of the existing system of land taxation, to substantiate the need to increase mandatory payments for land. The following methods were used - monographic - to study the foreign experience of land taxation, statistical - to collect data on tax revenues, the state of the land fund, analytical - in the study of methods of tax payment, on the basis of abstract-logical method problems were identified and ways of their solution were proposed. Results - foreign experience of tax regulation has shown that fiscal policy is aimed at creating favorable preferential conditions for agricultural producers and improving soil quality. The existing domestic methodology of tax payments depending on the purposes of application is considered. The analysis of tax payments in dynamics for 7 years is presented. Land tax rates and rent in the context of target use are calculated. It is revealed that the tax for peasant (farm) farms in accordance with the income from the sale of agricultural products is not quite acceptable, as the costs of its production are not taken into account. Conclusions - it is established that a 40-fold increase in the land tax is premature, since to date such a measure is legislatively approved in the amount of 20-fold. It is recommended to increase the tax burden on residential lands for individual residential construction, shopping and entertainment centers and industrial facilities. Involvement in agricultural turnover of 62.5 million hectares of pastures, concentrated in the category of reserve lands, will make it possible to improve their quality level and receive additional money for the state budget.

Fiscal Tools for Promoting Efficient Economic Growth

Contemporary crisis phenomena, including financial, structural, political, and social aspects, underscore the need for effective fiscal policy to ensure the resilience and development of the country. Additionally, there are currently complex challenges related to the war, such as infrastructure destruction, business shutdowns, and mass migration, which have significantly impacted the country’s economy and require additional financial resources for recovery. This situation necessitates the search for new sources of income and the optimisation of existing resources, highlighting the importance of effective tax regulation to overcome economic challenges during conflict. This scientific article aims to determine the role of fiscal policy in ensuring effective economic development, as well as the importance of tax instruments and their efficiency in promoting economic growth and optimising financial resources. In the research process, literary sources were analysed, and statistical data was scrutinised to evaluate the dynamics of state revenues and expenditures and the impact of tax receipts on the state budget. The study emphasises the importance of tax instruments for economic development and meeting the country’s financial needs. The efficient use of tax instruments facilitates the collection of sufficient revenues to fund social and economic needs. The study highlights the importance of employing the necessary tax instruments to ensure the country’s effective economic development. In martial law conditions, mobilising fiscal reserves and activating tax instruments become critical strategies for ensuring financial stability and supporting the economy. However, the successful implementation of these measures requires the improvement of the organisational structure and administration. A balanced approach to tax burden, a conducive environment for business, and the development of new revenue sources are critical in ensuring financial stability and supporting economic growth during conflict.

Analytical metrics of individual entrepreneurs as an indicator of the effectiveness of their taxation

The paper indicates that individuals are part of an important warehouse economic system, which contributes to the stable and sustainable economic development of the region through the implementation of such functions: creation of workers, incentives promotion of economic growth, promotion of innovation, development of local communities, ensuring competition, filling the budget , flexibility and adaptability to the smallest market minds, fostering the development of an entrepreneurial spirit. The concept of “analytical metric” is used for the identification of descriptive statistics, indicators or indicators of the activity of physical characteristics of employees, which is used for a quick and clear description of the study of indicators of the effectiveness of their application. The analytical metrics system has 15 indicators, and they have been diagnosed: dynamics of the number of PPE, structural dynamics of individual entrepreneurs per article, dynamics of income of individual entrepreneurs, tax payments of individual entrepreneurs, tax revenue - net, income per enterprise, tax payment per enterprise, tax payment of individual entrepreneurs for claims to the State and municipal budgets, the specific weight of the tax debt of PPE for obligations to local budgets s, tax revenue - gross, the number of open and closed PPE, as well as the relationship between them, distribution of PPE according to the use of taxation systems, distribution of the number of new PPE by types of economic activity, distribution of the number of new PPE by region, transaction costs of carrying out the PPE tax policy. A number of measures have been proposed at the level of the national and regional economy, as well as reforming tax legislation and strengthening tax discipline, to increase the effectiveness of taxation of PPE. It is proposed to reduce the tax burden - gross; carry out work to reduce the tax debt by explaining the principles of voluntary tax payment by the tax authorities; to implement local programs to support and develop entrepreneurship with a low rating of entrepreneurial potential, to reform the system of simplified taxation of sole proprietorships.

Trust in Government, Electronic Taxation, and the Adoption of Fintech

Mobile money (MoMo) services have become an integral part of the banking system in developing countries. Research is needed to understand the implications of taxing this financial technology sector and inform public policy. The current MoMo tax literature is limited by its focus on personal factors while neglecting institutional factors. The present study develops an integrated model of individuals’ attitudes toward MoMo tax payments and their intentions to use MoMo services while paying related MoMo taxes. To test the model, we analyze survey data collected from 892 participants across 16 regions of Ghana using structural equation modeling. Our findings indicate that perceived trust in government and perceived tax burden are significant determinants of attitudes toward MoMo tax payment, while perceived tax burden is influenced by perceived trust in government. Similarly, perceived tax burden mediates the effect of perceived trust in government on attitudes toward MoMo tax payments. Furthermore, the perceived usefulness of MoMo services is determined by perceived ease of use of MoMo services, whereas MoMo services use/tax payment intentions are determined by perceived trust in government, attitudes toward MoMo tax payments, and perceived usefulness of MoMo services. Finally, perceived usefulness of MoMo services mediates the effects of perceived ease of use on MoMo services and MoMo service use/tax payment intentions. We discuss explanations for these findings and provide practical, theoretical, and research implications.