Tax Law Changes Research Articles

The Effect of Changes in Tax Laws on Stock Liquidity: Evidence From the Tax Cuts and Jobs Act

ABSTRACTThis paper investigates the effect of the Tax Cuts and Jobs Act of 2017 (TCJA) on stock liquidity. The TCJA brought significant changes, including a reduction in corporate tax rates and provisions incentivizing the repatriation of foreign earnings. We find a negative association between TCJA‐related events and the liquidity of U.S. stocks, persisting even up to 60 days following legislative announcements. However, despite the negative impact on liquidity, there is evidence of improved price efficiency following the TCJA enactment, driven by increased informed trading. Additionally, our analysis extends to non‐U.S. stocks traded in U.S. markets and indicates similar relations.

The Quiet Evolution in International Tax: Domestic Law and Double Taxation

This article describes the respective roles of international tax law (predominantly tax treaties) and domestic tax law and their relationship with each other. This is a complex and interdependent relationship, with treaties, as special law, generally overriding domestic law. The article discusses the founding principle of tax treaties preventing double taxation, reflecting the original purpose of tax treaties. Subsequent developments over time have vigorously established the second principle of treaties: that the purpose of tax conventions is also to prevent tax avoidance and evasion. Such an increasingly important principle heralds the rise of anti-avoidance rules, prevention of abuse and the preservation of domestic taxing rights. The thesis in this article is that domestic law has prevailed against the more specialized law of treaties and at an increasing rate. This evolution has occurred in situations where the special law of treaties is “watered down” by the principle that treaties should not be allowed to be abused or in situations where they facilitate tax avoidance. What are the implications of this trend on the development of international tax policy? The article reflects on the respective roles of international and domestic law and guides us to suggestions on how to preserve important international tax principles in good faith and limit expedient domestic tax law changes when they are not driven by taxpayers’ abusive actions.

Mispricing and Anomalies: An Exogenous Shock to Short Selling from JGTRRA

We investigate the causal impact of short-sale constraints on market anomalies by analyzing a comprehensive set of 182 anomalies. Our approach leverages a persistent, robust, and plausibly exogenous shock to short-selling supply caused by the dividend tax law change in the Job and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003. Our findings reveal that anomalies decline after JGTRRA. However, this tax law change impedes arbitrageurs’ ability to correct mispricing, resulting in anomalies decaying less following dividend record months compared to other months post-JGTRRA. Furthermore, this effect is concentrated on overpriced stocks as opposed to underpriced stocks. Interestingly, while this shock significantly affects most types of anomalies, valuation anomalies remain unaffected.

Tax amendments in times of crises in Poland and Czech Republic – selected legal aspects

This publication is a fragment of research within the framework of broadly understood comparative tax law. The aim of this publication is to show the response of both the Polish and Czech legislators to the economic crises causedby the COVID-19 pandemic and the war in Ukraine. The methodology used in the article is related to the comparative legal method, the historical-descriptive method and the dogmatic method. The methodology in the article is chosen to show if the described different legal solutions may constitute an interesting reference to other EU countries as an example of the possible response to thefuture economic crisis. The purpose of this publication is also to indicate whether the analyzed countries decided to increase or reduce the tax burden and what the effectiveness of the selected legislative actions. In the conclusions, the authors indicate, among others that the COVID-19 pandemic and the war in Ukraine were for many countries a justification for changes in tax law, but the effectiveness of these actions remains at least questionable. Therefore, from the point of view of fiscal stability, in times of economic crises, appropriate solutions should always refer to the principle of legal certainty and long-termeconomic analysis of the effectiveness of a given amendment. This publication is, therefore, an incentive to reflect on the state of new regulations and conceptsof tax law implemented in response to the economic crisis and constitute an element of a broader discussion on the impact of tax regulations on the behaviour of taxpayers and the state budget.

Impact of Changes in Tax Law on Small Scale Businesses in India: A Survey-Based Analysis

Impact of Changes in Tax Law on Small Scale Businesses in India: A Survey-Based Analysis

A Critical Analysis of the Corporate Alternative Minimum Tax

ABSTRACT The corporate alternative minimum tax, enacted as part of the 2022 Inflation Reduction Act, intends to impose a minimum level of taxation on profitable large corporations using financial statement income as a tax base. Although both alternative tax bases and the usage of financial statement income in taxes have a long history in the United States, the tax represents a substantial change in the current corporate tax law. Although the corporate alternative minimum tax is predicted to raise billions of dollars from a small subset of the largest corporations, its design raises concerns about long-term efficacy. In this article, we summarize the development of the corporate alternative minimum tax in light of its historical predecessors and compare its design against accepted standards of good tax policy, ultimately identifying multiple inadequacies in its construction and implementation. We conclude by making policy recommendations. JEL Classifications: H21; H25; K34.

The Impact of Changes in Tax Regulations on Corporate Tax Avoidance Practices in Indonesia

Using a quantitative approach using Structural Equation Modeling with Partial Least Squares (SEM-PLS), this study examines the effects of tax law changes on business tax evasion practices in Indonesia. The research delves into the moderating impacts of industry type and economic conditions, in addition to the mediating roles of corporate financial structure and firm size. Each of the 150 companies in the sample, which come from a variety of industries, offers insightful information about their operational and financial traits. The findings show that corporate tax avoidance and changes in tax laws have a substantial positive correlation, which is mediated by company financial structure and business size. The moderating effects of business type and economic conditions are evident, underscoring the significance of industry-specific characteristics and contextual economic factors in comprehending the behavior of corporation taxes. Policymakers, tax authorities, and enterprises can benefit from the findings, which offer practical insights for formulating and enforcing tax policies.

TAX PAYMENT USING E-FILLING ON COMPANY IN PERUM GREEN VIEW CITY BATAM: AN INTRODUCTION

The General Directorate of Tax Regulations No. 47/PJ/2008 Article 1 Paragraph 7 states that e-Filing is an electronic method of filing SPT and the Annual SPT Extension Notification through the Application Service Provider. This process can be completed online and in real time. By utilizing the elffiling app, taxpayers may pay their taxes more easily. People with hectic schedules can especially benefit from this app, since it allows them to report their taxes without having to physically visit the tax office. People's faith in the tax system is increased since they can see and understand how tax dollars are spent more clearly. Sensitization and education regarding e-filing and the significance of tax payments are still required on a constant basis, even with a rise in awareness. It ensures that society may take full advantage of technological advancements and remains informed about changes in tax laws. It's critical to keep in mind that these conclusions are broad and flexible enough to be tailored to particular results in the dedicating process.

Case study of cost efficiency in selected business entities in Poland in light of current economic conditions

Motivation: Current economic conditions, including, but not limited to, the rising inflation rate, changes in electricity prices or changes in tax law significantly affect the manner of operation of business entities in Poland. The economic impact of these changes varies greatly depending on the type of business, industry or economic sector represented. These changes are also reflected in the level and structure of the entities’ own costs — primarily in the when considering costs by type. The multitude of changes that Polish companies now face also indicates the importance and relevance of the concept of effective cost management in these difficult economic conditions. Therefore, the need to adapt the business to the peculiarities of the new economic reality created the basis for a thorough identification of cost information needs coming in from the cost accounting systems used in companies. This became one of the prerequisites for undertaking research on evaluating the usefulness of cost accounting systems used in business entities for effective management of their costs.Aim: The purpose of this article is to analyze and assessment the cost effectiveness of selected entities representing production, commercial and service activities in the context of recent changes in economic in Poland.Results: The main conclusion of the analysis is that the current economic conditions have a significant impact on the level and structure of own costs in business entities. Therefore, these entities need specialized economic tools to improve the efficiency of their cost management. It is because the traditional full-cost accounting system used by most business entities in Poland is proving to be inadequate in this regard.

SOLIQ MASLAHATI TUSHUNCHASINING NAZARIY-HUQUQIY JIHATLARI

It is known that tax authorities and websites only provide information about taxes, fees, and changes in tax laws, so many taxpayers need tax advice from impartial experts. Currently, special tax consulting firms mainly provide advice on general issues, such as filling out tax returns, the procedure for incurring and paying taxes and fees, the taxpayer’s right to use tax benefits, and the procedure for their realization. Due to the insufficient and unsatisfactory legal literacy of taxpayers, there are many cases of untimely or incomplete payment of taxes, various mistakes in filling out declarations, correct and legal use of tax benefits. It should be noted here that tax counseling should act as a unique and suitable legal intermediary between taxpayers and tax authorities, providing practical assistance in the correct application and interpretation of tax legislation. This article analyzes the interpretation of the concept of tax consulting in our national legislation and the opinions of scholars on this concept.

Tax Compliance Costs for SMEs: A Survey of Tax Professionals in Ghana on External Cost of Compliance

The study sought to ascertain the magnitude of the external tax compliance costs incurred by SMEs in Ghana from the perspective of the tax professionals who provide the service. Tax professional firms were selected from the Institute of Chartered Accountants and the Chartered Institute of Taxation for the study. The study distinguished between the average annual costs for small, medium and larger firms to compute and file returns, deal with tax authorities, implement changes in tax laws, and maintain records for tax purposes on behalf of their clients. The cost was found to be regressive in nature, indicating that the burden was relatively higher for small businesses.

Evaluasi Tax Control Framework Perusahaan Dagang dalam Menghadapi UU HPP

Clear and structured tax regulations are very important in a country's economic system, but they can change along with developments over time and economic policies. This change can be caused by the increasing complexity of tax regulations, which can trigger non-compliance and tax avoidance that is detrimental to the country. This research aims to evaluate the readiness of trading companies, especially PT. H, in facing the harmonization of tax regulations and to determine the impact. PT. H as a trading company was chosen because trading companies have a simpler financial structure compared to manufacturing companies and service companies. This makes it a good case study for understanding the impact of tax law changes without too many other complex factors involved. This research uses the Tax Control Framework indicators from the OECD, which include tax strategy, control, division of tasks, documentation of the tax implementation process, and monitoring of tax implementation. The evaluation results show that PT. H has taken strategic steps such as monitoring regulations, partnering with tax consultants, and implementing strict controls to ensure the accuracy of tax reporting. They also carry out focused division of tasks, detailed documentation, and regular internal monitoring and audits. Despite facing several challenges such as understanding complex regulations and lack of government outreach, PT. H remains committed to maintaining tax compliance and optimal company performance.

Income Tax Cut and Firm Tax Avoidance

This study aims to examine the impact of Indonesian corporate income tax rate reduction on public companies’ tax avoidance. This study utilizes a quasi-experimental design with the difference-in-differences (DID) method to isolate the effect of corporate income tax rates changes on corporate tax avoidance behavior. Firms’ ownership structure is used to separate firms that are more likely to be affected by the tax law changes, thus representing the treatment group in the DID setting. Utilizing a sample of public companies listed on the Indonesia Stock Exchange in the 2019 and 2020 periods, this study finds that in the year preceding the tax rate reduction, firms with greater institutional ownership exercise higher tax avoidance compared to other firms. The differences, however, are not statistically significant, which may be caused by the short timespan between the policy announcement and tax filing period, limiting the time available for firms to adjust their tax avoidance behavior.
 Keywords: Tax Cut, Tax Avoidance, Institutional Investor

Tax Law in Slovakia under the Influence of Pandemic, Digital Transformation and Inflation

Tax law, as a branch of law belonging to the hard core of public law, is one of its branches that are characterised by instability rather than the stability of its rules. The reasons for the frequent changes in tax law can be found not only in political agendas and the economic view of taxes, but equally in external impacts, to which the legislature tries to respond promptly. The paper aims at clarifying the competing views on the position of tax law in the legal system and defining its functions, as they have been interpreted differently in different periods of social development. The paper then examines the significant changes in tax law in recent years, triggered by the Covid-19 pandemic, digital transformation and inflation, and assesses the extent to which these changes contribute to the fulfilment of the core, the fiscal function of taxes.

International taxation and the organizational form of foreign direct investment

We investigate the relation between international taxation and the organizational form of foreign direct investment (FDI). Using micro-level data on inbound FDI relations in Germany, we find that a higher tax burden on income earned in a corporate subsidiary increases the probability that a multinational corporation (MNC) conducts foreign investment through a non-corporate flow-through. This effect is economically meaningful and varies with the relative importance of tax-motivated income shifting, a subsidiary’s non-tax benefits of limited liability and legal independence, and an MNC’s local knowledge. Moreover, we examine potential real effects of organizational form choices and document that affiliates established as flow-throughs exhibit a lower loss propensity and are less profitable than affiliates established as subsidiaries. Taken together, our findings inform policy makers about the potential response of MNCs to tax-law changes and suggest that the chosen organizational form can shape the future characteristics of investments abroad.

Summaries of Articles

Summaries of Articles

Ranking the Key Indicators of Tax Avoidance in Companies Using the Exploratory Factor Analysis Approach

The method of measurement and factors affecting tax avoidance is one of the important topics of accounting, and its measurement criteria are important in order to create an evaluation framework and its relationship with the concept of tax planning. Therefore, according to the possibility of accessing the data, the statistical sample consisted of companies admitted to the Tehran Stock Exchange in two five-year periods (1389 to 1393 and 1394 to 1399) due to the change in tax laws, and 12 effective tax rates were selected as variables. According to the results of the exploratory factor analysis, for the entire sample and separately for each industry, taking into account the declared and determined tax figures of the companies, the highest frequency is due to factor loadings with accrual and paid tax factors in the long term, therefore, taking into account the determined tax figures, the highest coefficient The explanation is given by the effective cash rate difference TA_Cash_ETR and the lowest by the difference between accounting profit and taxable Perm, and including the declared tax figures, the two measures of the effective cash rate difference TA_Cash_ETR and the three-year cash effective tax rate Cash_ETR3 have the highest and permanent differences based on optional accrual items DTAX, have had the lowest explanatory coefficients, in other words, the mentioned criteria have the most and the least relevance in measuring the tax avoidance of companies active in Iran's economic environment. According to the nature of the industry and legal regulations, the most explanatory of those long-term criteria, especially based on cash flow, which is adjusted with the industry where the company operates, also despite the fact that it is more important to include the firm figures of the companies in order to measure the purpose of the research, with Including the stated figures, the mentioned criteria have been effective and reliable.

Comparative analysis of commercial partnership in the context of changes in Polish tax law

The aim of the article was to examine the implications of changes in the rules of taxation of the income of limited joint-stock partnerships (LJSP) and limited partnerships (LP) for their dynamics and structure, especially against the background of other commercial partnerships. The hypothesis is that the changes in the rules of taxation of the income of limited joint-stock partnerships and limited partnerships negatively influenced their attractiveness as legal forms of running a business. The research methods used in the article were the analysis of the dynamics of time series, the Fisher-Snedecor test to verify the hypothesis of equality variance and the least squares method. It turns out that the amendment to the tax laws of legal persons/ entities (01.01.2014) by equalising the tax status of the LJSP with the status of legal persons/entities contributed to the increase in the tax burden of those companies, the decline in their numbers in both the commercial partnerships (CP), as well as companies in total in Poland, and in this way the decrease of the structure and dynamics indices. In turn, further changes from 1 January 2021 meant that not only the LJSP ceased to be attractive as a tool to minimise the tax burden for the owners, but also LP. In 2020, the highest decrease in the number of all companies in Poland, amounting to 6.8%, was recorded by LJSP, while in 2021 – LP (7.1%). The results of the Fisher-Snedecor test for the difference in the number of companies calculated year on year confirmed that after 2014 there was a large change in the level of differentiation in the number of limited joint-stock partnerships compared to the previous years. The number of companies decreased rapidly from year to year, which proves the decline in interest in this form of business, and the decline was manifested by a significant increase in data variability, as demonstrated by the Fisher-Snedecor test. The author observed a similar situation for limited partnerships as the change in their number year-on-year was also very differentiated before and after 2014. However, such a conclusion cannot be drawn in relation to general partnerships and partnerships, which indicates that the change in regulations introduced on 1 January 2014 did not affect the trend to create these activities. Additionally, the estimation of regression model parameters for CP group companies showed that the change in the number of LJSP year on year did not change the number of companies of other types.

Spillover effects in managerial compensation

Prior evidence on how executive compensation influences managerial incentives to take risks in shareholder’s interest ignores potential spillover effects, even though there is evidence that compensation in one firm affects the compensation in other firms. We address this issue in a way that considers a broader view of corporate networks. Specifically, we examine the effects of a tax law change that induced a change in the vega of CEO compensation. We find that this change is associated with a larger increase in the vegas of directly affected CEOs than would be estimated without considering spillover effects. Moreover, we find evidence for the diffusion of these changes to other firms within their industry. Further, this diffusion is greater the more affected firms within an industry. And finally, we find that these changes are associated with increases in the asset volatility of both treated and untreated firms.

Are Changes in (Czech Direct) Tax Law Necessary, or Is It Just a Politicum?

This contribution disproves the hypothesis that most of the changes in Czech direct tax law are adopted to minimise negative aspects connected with the Covid-19 pandemic and the Ukrainian war. On the contrary, most of the significant changes in the Czech tax law adopted in the last three years (abolition of the super-gross wage, lump-sum tax, tax relieves, etc.) had no connection to the SARS-CoV-2 coronavirus causing Covid-19 illness or the war in Ukraine. These tragic incidents were just a pretext to advance political goals.